1955 (9) TMI 73

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....ame to Rs. 84,540. Dadajee Dhackjee & Co. were assessed to tax in the assessment year 1945-46 and in the assessment order out of Rs. 84,540, paid as commission to its employees by the company Rs. 56,360 was disallowed. The total income of the company was assessed at Rs. 4,11,084. In other words, as the assessment order stood, Dadajee Dhackjee & Co. was charged to tax in respect of Rs. 56,360 although it had paid that amount as commission, because that was not considered as a permissible deduction. The assessee therefore in his own" assessment claimed exemption from tax on Rs. 18,787, which represented his one-third share of Rs. 56,360, and he made this claim on the basis of the notification issued by the Finance Department on the 21st of Ma....

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....oyee, viz., Rs. 18,787, the employee was liable to tax. This contention was accepted by the Tribunal and the assessee has come on this reference. The Advocate-General has argued that both the conditions laid down in the Finance Department notification are not satisfied. He points out that the commission was paid on the turnover of the employer company and not out of profits. That is clearly an untenable contention. The mode of computation of the commission of the assessee was undoubtedly 1 per cent, of the turnover. What the Finance Department notification requires is that the source out of which this commission is paid is the profit of the employer and there is ho finding before us that in fact this commission was not paid out of the profi....

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.... out in the section on which the Advocate-General himself relies, which is section 55. That is a section dealing with super-tax, which lays down that, in addition to the income-tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income of the previous year super-tax as mentioned in that section. Therefore, in this section a clear distinction is drawn between charging, levying and paying. If that be the true position, when we turn to the assessment order, there is no doubt that there has been an assessment of the total income at Rs. 4,11,084, and in this assessment Rs. 56,360 is included as income which should bear tax. Once the assessment is made, the income becomes liable to pay income-ta....