TaxTMI 
TaxTMI 
1964 (12) TMI 2
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....acts and in the circumstances of the case, managing agency commission and office allowance received by the assessee-company from M. G. R. Iron & Steel Works Ltd. was income of the assessee-company for the assessment year 1954-55 even though it was surrendered by the assessee-company, just because the resolution surrendering the commission and the allowance was passed after the end of the accounting period ? " These questions have arisen under the following circumstances : The assessee is a private limited company managing other companies as managing agents and also doing business in minerals. The assessment year in question is 1954-55 and the corresponding previous year is 2010 Ratha Jatra ending on July 11, 1953. The assessee-company....
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....espect of the first four companies, the assessee-firm was entitled to deduction of the managing agency commission and rejecting the other contentions of the assessee in respect of other claims. Mr. Sankar Ghosh, learned counsel for the assessee, has challenged the decision of the Appellate Tribunal on the following grounds : 1. The office allowance amounting to Rs. 18,000 receivable by the assessee from M/s. Rungta Engineering Construction Co. Ltd., Orient Industrial Engineering Co. Ltd., Bengal General Trading Co. Ltd. and Orient Potteries Ltd. in the accounting year ending on July 11, 1953, but relinquished by the company's resolution dated July 5, 1953, on grounds of commercial expediency, should not have been included in the total....
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....ppointed on the same term. The assessee at this stage agreed to forgo the previous rate of 100 % and accept a reduced rate of 2 1/2 % of the total freight. On December 30, 1947, at the extraordinary general meetings of the managed companies the two private limited companies were appointed as managing agents with effect from January 1, 1948. The relevant accounting year ended on March 31, 1948, and, thereafter, at the annual general meetings of the two managed companies held in December, 1948, the commission was formally reduced from 100 % of the freight to 2 1/2%. As a result the assesseefirm gave up 75 % of its earnings during the relevant years of account which amounted to Rs. 1,36,903 (Malabar Steamship Co. Ltd.) and Rs. 2,00,625 (New Dh....
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....e books of account ... Here too, the agreements within the previous year replaced the earlier agreements and altered the rate in such a way as to make the income different from what had been entered in the books of account. A mere book-keeping entry cannot be income, unless income has actually resulted and, in the present case, by the change of the terms the income which accrued and was received consisted of the lesser amounts and not the larger. " Mr. Ghosh has argued that following the same principle the Income-tax Officer should have held the office allowances payable to M/s. Rungta Engineering Construction Co. Ltd., Orient Industrial Engineering Co. Ltd., Bengal General Trading Co. Ltd., and Orient Potteries Ltd , amounting to a tota....
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....lso payable and can only accrue at the end of the year. As the office allowance has been given up within the accounting year, he has submitted, that, like the claim in respect of commission, the office allowance also has not accrued within the accounting year and, as such, should not be made taxable. In our opinion this contention cannot be accepted. Clause 3 of the agreement clearly provides that the agency company will be entitled to receive commission in the shape of office allowance of Rs. 500 per month and a commission of 100 % of the net yearly profits which in no case would be less than Rs. 6,000 for the whole year. The proviso specifically mentions the case of commission and nothing in the proviso can be referable to the case of ....