TaxTMI 
TaxTMI 
1961 (7) TMI 6
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....lic joint stock company called the Nandlal Bhandari Mills Ltd. The appellant had appointed a firm, Messrs. Nandlal Bhandari and Sons, as agents, secretaries and treasurers of the mills, and under clause (6) of the agreement of agency, it agreed to pay to the agents an office allowance, commission on the company's net profits and commission on the sale proceeds of sales of yarn, cloth, etc. The remuneration of the agents for the three accounting years was as follows : -------------------------------------------------------------------------------------------------------------------------------------------------- Remuneration As per agree- Accounting Years ment. ------------------------------------------------------------- 1941 1942 1943 Rs. Rs. Rs. -------------------------------------------------------------------------------------------------------------------------------------------------- Clause 6 Rs. 1,500 18,000 18,000 18,000 (a) Fixed monthly p.m. for the for the allowance as office year. year. allowance (b) Commission on the @ 16% net 2,68,335 6,15,946 10,52,939 company's net profits on profits (c) Commission on the sale proceeds of sales of @ 1-9-0....
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.... of the appellant, the remuneration paid to the agents was deductible under rule 3(2)(ix). It is necessary at this stage to see the legislative machinery existing in the Holkar State in 1927 and onwards. On February 27, 1926, His Highness Maharaja Tukoji Rao III abdicated, and his son, H. H. Maharaja Yeshwant Rao Holkar, became the Ruler, whose installation ceremony was performed on March 11, 1926. A Regency Council was appointed under the orders of the Government of India for the administration of the State during the minority of the Maharaja. This Regency Council, which was called the Cabinet, was entrusted with the administration of the State according to existing rules and practice, under the supervision and with the advice of the Agent to the Governor-General in Central India. The Prime Minister of the State was the Chairman. H. H. Maharaja Yeshwant Rao Holkar attained majority on September 6, 1929, and resumed sovereign powers on May 9, 1930. It was during the minority of the Ruler that the Cabinet had promulgated the amended Rules of 1927. In 1931, the decision of the Privy Council in the well-known case of Pondicherry Railway Co. Ltd. v. Commissioner of Income-tax was ren....
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....he Maharaja is pleased to order (vide Huzur Shri Shankar Order No. 173 dated 29th June, 1933) that the opinion of the Full Bench of the High Court being that the managing agent's commission on profits is not an item of expenditure incurred solely for the purpose of earning the said profit within the meaning of rule 3(2)(ix) of the said Industrial Tax Rules and this being also the view of the Cabinet as expressed in their resolution No. 1072 dated 28th August, 1931, the aforesaid Cabinet Resolution be given effect to and the industrial tax due on the amount of the managing agent's commission on profits be recovered with effect from the date of the said Cabinet Resolution. " This notification, it is contended before this court, had not the force of law and was not enforceable against the appellants, who claim that they are entitled to show that the remuneration paid to the agents was deductible from the profits of the mills before computing the industrial tax. In this connection, the appellants wish to use the later decisions of the House of Lords in Union Cold Storage Co. Ltd. v. Adamson and of the Privy Council in Indian Radio and Cable Communications Co. Ltd. v. Commissioner of ....
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....gh Court was obtained, and the second notification merely pointed out that the earlier notification was to be given effect to, and did no more than add a second administrative direction. On the other side, it is contended that the Cabinet could make laws as often as it pleased and that the notifications must be read either as independent rules or as a legislative explanation of rule 3(2)(ix). In so far as the legislative supremacy of the Cabinet was concerned, no question was raised before us. When the Indore Industrial Tax Rules, 1926, were framed, they came into existence by virtue of a Cabinet Resolution of that year. When they were modified, they were superseded by yet another Cabinet Resolution of the year 1927, which promulgated the new Rules with retrospective effect from May 1, 1926. The source of the Rules was thus a Resolution of the Cabinet on both the occasions, and it is not denied that the rules thus framed had legislative sanction and were unquestionable. When the Cabinet promulgated its notifications in 1931, 1932 and 1933, it followed the same procedure, and it stated that the notification of 1932 was " in continuation of this office Notification No. 4733 dated Dec....
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....override all other laws which were in conflict with them. So long as a particular Firman held the field, that alone would govern or regulate the rights of the parties concerned, though it could be annulled or modified by a later Firman at any time that the Nizam willed. " The same can be said of the Ruler of the Holkar State. When to the order of the Ruler was added the usual mode of making and promulgating rules, the position which emerges is really unassailable. Mr. Desai, in attempting to show that the ruling does not apply to the case raised two contentions. The first was based upon a more recent decision of this court in Madhaorao v. State of Madhya Bharat, where certain Kalambandis of the Maharaja of Gwalior were considered. This court, in deciding whether the Kalambandis were existing law under article 372 of the Constitution, observed : " In dealing with the question as to whether the orders issued by such an absolute monarch amount to a law or regulation having the force of law, or whether they constitute merely administrate orders, it is important to bear in mind that the distinction between executive orders and legislative commands is likely to be merely academic w....