TaxTMI 
TaxTMI 
1954 (4) TMI 65
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....tral Bank of India the Tribunal were right in law in holding that the income earned by the former as a guarantee commission agent and as a treasurer was income from business as defined in Section 2(5) of the Excess Profits Tax Act)?" There was an agreement entered into between the assessee and the Central Bank of India Ltd., on the 8th of December, 1935, and the assessee was appointed treasurer and guarantee commission agent of the Bank at Agra and at other branches. The agreement is printed at page 5 of the stat6ement of the case. For his work as treasurer the assessee was to get a remuneration of Rs. 100 per mensem. The duties that he was to perform as treasurer are set out in several paragraphs of the agreement. In paragraph 2 it is p....
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....assigned to him was that of guarantee commission agent for which he was to get a commission. As guarantee commission agent he had to recommend to the bank merchants and dealers who wanted to borrow money and if the bank accepted the names suggested, then they were termed approved borrowers. If any money was advanced to an approved borrower and he failed to repay the loan, the bank could realise the amount from the guarantee commission agent. The guarantee commission agent was required to furnish a sum of Rs. 75,000 as security which was liable to be replenished whenever it was reduced by reason of a loan advanced to an approved borrower having had to be adjusted against the security. Any legal proceeding against the borrower was to be insti....
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.... agency business and not in the cash department. Remuneration of the assessee is mentioned in paragraph 20. He was to get Rs. 100 for his work as treasurer and he was to get commission at a sliding, scale for his work as guarantee commission agent. The question, therefore arises whether the work of the assessee as treasurer and guarantee commission agent is service, or is partly service and partly business, or the whole of it is business. The Appellate Tribunal has held that the whole of it is business. Recently in several cases we had GBP0 consider whether the income could be classified as salary payable to a servant or was income from business. In a contract of service there are three basic concepts which must be borne in mind. A....
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....cial terms had been imposed to guard the interest of the bank against possible loss or carelessness on the part of the assessee or the subordinate staff maintained under his control, but so far as the other work of the commission agent is concerned the assessee's position appears to us to have been entirely different. It was open to the assessee to spend what he liked, to make such enquiries as he considered necessary and in any manner that he considered convenient and then recommend to the bank the names of persons who wanted to borrow money. It was open to the bank to accept the whole list or to reject the entire list and if the entire list was rejected the assessee would get nothing in return for the expenditure incurred by him in making....
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....l inconsistent with the relationship between a master and servant." Many of the terms in the agreement now in question are very similar to the terms of the agreement that were considered by us in Gadodia's case [1951] 20 ITR. 460. Again, in L. Jeewan Lal v. CIT [1953l 24 ITR. 217, we discussed the various tests that might be applied in determining whether the contract was a contract of service or a commercial agreement between two businessmen. We pointed out that if the assessee is entitled to the profits and liable for the losses of a business and has the discretion as to how he has to carry it on, that is inconsistent with contract of service. We also pointed out that the question of the control to be exercised in the carrying on of....