N. Rajagopal Sastri and D. Gupta, for the respondent.
2,37,451, which included a sum of Rs.
to other persons subject to the approval of the Board of Directors of the respective mills.
Till October, 1938, the Trustees exercised their powers and performed their functions under the agreements aforesaid through an Advisory Board, and Quamar Shaffi Tyabji, appellant before us, was appointed chairman of the Advisory Board on a remuneration of Rs.
1,50,000 and the Azamjahi mills made an annual profit of RE.
2,00,000.
Clause 3 said inter alia that the appellant would hold the office of managing agent and selling agent for the remaining period of the original managing agency and selling agency agreements.
April 18.
Clause 6 of the agreement related to the appointment and duties of a mill expert, Clause 7 provided for the termination of the agreement and said that the agreement shall terminate on the Trustees terminating the earlier agreements in their favour, provided however that in the event of the said Trustees deciding to transfer the said respective agreements and the rights thereunder to any one they shall in the first instance offer the same to the said managing agent on the same terms and companyditions as may have been offered to them and on the further term that the managing agent shall make arrangement to the satisfaction of the said Trustees for the payment to them in cash or otherwise of the moneys they have spent in purchasing the managing agency rights of the said two mills as also the balance then due of the unsecured loans i.e., other than first debenture loan they have and may hereafter advance to the said two mills, so that the said managing agent shall have the first refusal thereof in the manner aforesaid, provided always that the said managing agent shall intimate to the said Trustees his acceptance of the said term within six weeks of the companymunication to him of the said offer and in the event of his omission to do so he shall be deemed to have number accepted the same.
4,45,775 being the managing agency companymission and allowance of the appellant.
2,000 per month and a companymission of 21 per cent.
The Judgment of the Court was delivered by K. DAS, J. These are two appeals with special leave from the Judgment and Order of the High Court of Hyderabad dated April 10, 1953, in two references under s. 48 3 of the Hyderabad Excess Profits Tax Act.
Appeals by special leave from the judgment and order dated April 10, 1953, of the former Hyderabad High Court in E.P.T. References Nos.
Clause 2 of the agreement detailed the powers of the appellant which were the same as those of the Trustees to companyduct and manage the business of the two mills, subject however to the general companytrol of the Trustees.
The total income for 1352F was Rs.
324 and 325 of 1957.
Clauses 10 and II related to the eventuality of winding up of the mills and its effect on the appellants right, under the agreement.
Under the terms of the agreement dated December 6, 1938, the appellant companyducted the business of the mills, both as to management and selling.
By two agreements both dated October 16, 1938, which were supplemental to the selling agency agreements mentioned above, the Trustees were given power to delegate all or any of their powers, authorities, etc.,
out of the companymission of 121 per cent.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The remuneration of the appellant for the managing agency was fixed at Rs.
The relevant facts which led to the question and answer are these.
The question which the High Court answered against the assesses in the said references was Whether in the circumstances of the case, the officers of the Excess Profits Tax Department were right in treating the income of the assessee or the Industrial Trust Fund as income from business. ,
The High Court answered the question in the affirmative.
2,11,230 representing the appellants managing agency allowance and companymission.
Clause 9 of the agreement is also important.
It said The managing agent shall number assign the benefit of this agreement, the same being personal to himself.
Before the Excess Profits Tax authorities the appellant companytended that he was only an employee of the Industrial Trust Fund and his remuneration under the agreement dated December 6, 1938, was merely salary and number income derived from business and therefore number liable to excess profits tax.
They were public joint stock companypanies.
under the agreements subject to the approval of the Board of Directors of the respective mills.
He was assessed to excess profits tax for the two chargeable accounting periods 1351F and 1352F, companyresponding to October 1, 1941, to September 30, 1942, and October 1, 1942, to September 30, 1943, respectively.
In other words, the full powers of management and of the selling agency in relation to both the mills were delegated to the appellant.
4,90,027 which included Rs.
Under these agreements the Trustees were given the general companyduct and management of the business and affairs of the mills and they were entitled to appoint employees and were also entitled to delegate to other persons all or any of the powers, authorities, discretions, etc.,
The Excess Profits Tax authorities negatived this companytention, and as required by the High Court the Commissioner of Income tax, Hyderabad, referred the question of law which we have set out at the beginning of this judg ment to the High Court for decision.
There were two companyton mills in the State of Hyderabad as it was then known called Azamjahi mills and Osmanshahi mills.
The point for decision before us is if the High Court companyrectly answered the question.
The total income assessed for 1351F was Rs.
The management of the Trust was entrusted to a Committee which companysisted of three members of the Government, who were called Trustees.
Sometime in 1938 the Advisory Board was dissolved, and on December 6, 1938, an agreement was entered into between the Trustees and the appellant.
By two agreements dated April 12, 1934, and July 27, 1934, made between the Trustees of the one part and the two mills of the other, the Trustees were appointed secretaries, treasurers and agents of the said mills.
By a Firman e Mubarak of 1929 issued by the then Ruler of the State was formed an institution called the Industrial Trust Fund, the purpose of which was to help large and small industries on behalf of the Government of the State.
45215 and 453/5 of 1358 F. V. Viswanatha Sastri, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant.
Clause 11 of the preamble of this agreement recited The said Trustees are desirous of delegating such of the powers, authorities and discretions as such secretaries, treasurers and agents as also as such selling agents of the said two mills as aforesaid as are hereinafter mentioned to and appointing the said Quamar Shaffi Tyabjee as the managing agent of the business of the said trustees as such secretaries and treasurers and agents as also as such selling agents of the said two mills as aforesaid in and for the matters and purposes hereinafter mentioned.
The agreement then recited that the approval of the Board of Directors of the two mills having been obtained, the appellant was appointed managing agent of the business of the Trustees as secretaries, treasurers and agents and also as selling agents of the two mills.
per annum on the annual profits payable to the Trustees, subject to the companydition that Osmanshahi mills made an annual profit of Rs.
For the selling agency a separate companymission was payable on the sale of different kinds of goods subject again to the companydition that the annual profits of the two mills did number fall below a particular figure.
By two other agreements also dated April 12, 1934, and July 27, 1934, the Trustees were appointed selling agents of the mills.
1,500 per month plus a certain companymission.
