Managing agency commission accrual depends on the real entitlement under the operative arrangement, not a higher notional figure.

Managing agency commission is taxable only to the extent the assessee became entitled under the operative arrangement; book entries and a notional amount under an earlier contract are not conclusive. Where the parties mutually reduced the remuneration before the liability crystallised, the higher figure cannot be treated as accrued income of the year. The real commission payable, not the originally computable amount, determines taxability, so the disputed sums were not income of the assessee for the relevant previous year.

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Issues: Whether the managing agency commission allegedly foregone by the assessee had accrued as income of the previous year, or whether the amount assessable was only the reduced commission actually agreed between the parties.

Analysis: The commission entries in the assessee's books were not conclusive of accrual if, on the facts, the parties had arranged that the remuneration payable would stand reduced. The Court treated the dealings as a business arrangement reached by mutual consent and not as a unilateral abandonment of income already earned. In managing agency matters, the controlling question is the real commission to which the managing agent became entitled, not merely the amount originally calculable under the earlier agreement. On the facts, the commission payable to the assessee stood reduced before the relevant liability crystallised, so the higher amount could not be treated as income of the previous year.

Conclusion: The disputed sums were not income of the assessee for the previous year ended 31 March 1948.

Ratio Decidendi: In determining taxability of managing agency commission, the decisive question is the real amount to which the assessee became entitled under the operative arrangement, and not the larger amount notionally computable under an earlier contract.

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