Rebate on remuneration receipts denied where the payment was not for services rendered and arose from a collusive transaction.

Rebate under the 1922 income-tax notifications was unavailable because the essential condition was that the relevant receipt must be salary, bonus, commission, or other remuneration for services rendered to the company in its business. The final factual findings showed that the managing agency had been terminated and that the payment was not genuine compensation for services, but arose from a collusive transaction based on extra-commercial reasons. As no services were rendered in the relevant year, the receipt did not qualify for the notified rebate and the claim failed in favour of the Revenue.

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Issues: Whether the assessee was entitled to rebate on the income-tax payable on the sum of Rs. 66,406 under Notification No. 878-F dated 21 March 1922, as amended by Notification No. 8 dated 24 March 1928.

Analysis: The claim depended on whether the amount received by the firm represented salary, bonus, commission, or other remuneration for services rendered to the company for the purposes of its business. The factual findings, which had become final, showed that the managing agency had been terminated and that the receipt of Rs. 2,50,000 was not in truth compensation for services rendered but arose from a collusive transaction based on extra-commercial reasons. Since the firm rendered no services to the company in the relevant year, the essential condition of the notifications was not satisfied.

Conclusion: The assessee was not entitled to rebate under the notifications and the answer was against the assessee and in favour of the Revenue.

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