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Issues Involved:
1. Whether there is any material for the Tribunal's finding that the appellants (respondents in this case) were being assessed on cash basis in the prior years? 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal's finding that the sum of Rs. 2,26,850 could not be assessed for the assessment year 1942-43 is correct in law? Issue-wise Detailed Analysis: Issue 1: Whether there is any material for the Tribunal's finding that the appellants (respondents in this case) were being assessed on cash basis in the prior years? The Tribunal found that the firm was assessed on a cash basis in prior years, but this was contested. The firm maintained no accounts of its own for the managing agency commission and remuneration payable by the mills to them. The Income-tax Officer argued that the firm's accounts were not on a cash basis, pointing out that the firm's income was computed on a mercantile basis in previous years. The Tribunal's view that the firm's method of accounting was on a cash basis was deemed incorrect. The court concluded that the accounts of the mills could not be treated as the firm's accounts and that the method of accounting adopted by the mills did not necessarily reflect the firm's method of accounting. Thus, the first question was answered in the negative and against the assessees. Issue 2: Whether on the facts and in the circumstances of the case, the Appellate Tribunal's finding that the sum of Rs. 2,26,850 could not be assessed for the assessment year 1942-43 is correct in law? The firm argued that the amount was not received during the accounting year and thus should not be taxed. The Tribunal found that the resolution of the Board of Directors to keep the amount in suspense was bona fide, and since the amount was not paid during the accounting year, it did not accrue as income. The court examined several legal precedents and determined that for income to be taxable, it must be money available for the assessee's use and deposited at their direction and under their control. The court concluded that the firm's right to receive the amount did not constitute income as it was not at their disposal and they could not have called the money. Therefore, the second question was answered in the affirmative and in favor of the assessee. Referred Case No. 78 of 1946: This case related to the assessment year 1943-44 and involved a sum of Rs. 2,20,702 as managing agency commission. The firm was assessed on this amount as it was credited in the accounts of the mills. Additionally, a sum of Rs. 81,023 claimed as commission on sales in a Native State was found to be remuneration for managing agency work and not commission on sales. Therefore, the first question was answered in the affirmative and against the assessee, and the second question in the negative and against the assessee. Summary of Judgments: In Referred Case Nos. 76 of 1946, 32 of 1947, and 56 of 1947, the court found no material for the Tribunal's finding that the firm was assessed on a cash basis and ruled that the sum of Rs. 2,26,850 was not taxable for the assessment year 1942-43. In Referred Case No. 78 of 1946, the court upheld the assessment of Rs. 2,20,702 and denied the exemption claim for Rs. 81,023. The assessee was awarded costs in Referred Case No. 76 of 1946 and was ordered to pay costs in Referred Case No. 78 of 1946.
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