Agency relationship and business income: commission-based management remuneration was treated as taxable business income, not salary.

General management powers under an agency agreement, exercised subject only to broad supervision and not direct control over day-to-day performance, indicated an agency relationship rather than service. The appellants' authority to manage operations, appoint and remove staff, contract on the company's behalf, and hold assignable rights for a long tenure was inconsistent with a servant's position, and their commission-based remuneration was therefore not salary or wages. Continuous and organised management of another concern's affairs could amount to carrying on an agency business even if confined to one company, so the remuneration was income from business and liable to excess profits tax.

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Issues: Whether the appellants were servants or agents of the company, and whether the remuneration received by them under the agency agreement constituted income, profits or gains from business liable to excess profits tax.

Analysis: The agency agreement and articles of association gave the appellants general management of the company's business subject to the directors' control and supervision, but not to direct control over the manner of performance. Their powers to conduct day-to-day management, appoint and remove staff, enter into contracts, deal with the company in specified transactions, assign the agency with approval, and continue for a long tenure were inconsistent with a mere servant's position. The remuneration was commission-based rather than wages or salary. The Court further held that business may exist even where activities are confined to one concern, and that the appellants' continuous and numerous management operations, together with the nature of their objects, remuneration, and assignability of rights, amounted to carrying on an agency business.

Conclusion: The appellants were agents and not servants, and their remuneration was income from business chargeable to excess profits tax.

Ratio Decidendi: Where an incorporated company's activities consist of continuous and organised agency operations involving general management of another concern's affairs under only general supervision, the remuneration received for those activities is business income and not mere salary or wages.

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