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Issues Involved:
1. Deductibility of Rs. 10,00,000 paid as compensation for loss of office. 2. Validity and genuineness of the agreement with Foster. 3. Consideration of material evidence by the Tribunal. Issue-wise Detailed Analysis: 1. Deductibility of Rs. 10,00,000 Paid as Compensation for Loss of Office: The primary issue was whether the sum of Rs. 10,00,000 paid to Foster as compensation for loss of office was allowable as a deduction in computing the business profits of the assessee for the relevant chargeable accounting period. The Tribunal initially allowed this deduction, but the Income-tax Officer and the Appellate Assistant Commissioner disallowed it, arguing that the payment was not compensation for termination of service but a price paid for buying off an onerous agreement. The Tribunal found that the payment was made solely for commercial considerations and was not influenced by personal considerations. The High Court upheld the Tribunal's decision, stating that the Tribunal had considered all relevant evidence and had not ignored any material facts. 2. Validity and Genuineness of the Agreement with Foster: The Tribunal found that the agreement dated March 9, 1931, and the supplementary agreement dated June 6, 1932, were genuine and had been acted upon in previous years. The Tribunal noted that the terms of the agreement were peculiar and one-sided in favor of Foster, but it had been consistently recognized and acted upon. The Tribunal also found that the agreement did not automatically terminate in 1947, as contended by the Appellate Assistant Commissioner, because Foster had exercised his option to continue the agreement for a further three years and had returned to India to perform his duties. The High Court agreed with the Tribunal's findings, noting that the Tribunal had considered the relevant evidence and had not ignored any material facts. 3. Consideration of Material Evidence by the Tribunal: The revenue contended that the Tribunal had ignored essential findings of the Appellate Assistant Commissioner, such as the non-crediting of Foster's remuneration for 1947 and the failure of the assessee to provide details for this non-crediting. The High Court, however, found that the Tribunal had considered all relevant evidence, including the fact that Foster's remuneration for 1947 was Rs. 4,46,613, and had not ignored any material facts. The High Court noted that the Tribunal had reached its own conclusion based on the evidence before it and was not required to deal in extenso with the entire order appealed from. The High Court cited several Supreme Court cases to support its position that the Tribunal's findings were not vitiated by ignoring material evidence. Conclusion: The High Court answered the question referred in the negative and in favor of the assessee, concluding that the Tribunal had not misdirected itself in law and had considered all relevant evidence. The Tribunal's decision to allow the deduction of Rs. 10,00,000 paid to Foster as compensation for loss of office was upheld. The High Court also noted that there would be no order as to costs.
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