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Issues Involved:
1. Validity and legality of the notice of enhancement given by the Appellate Assistant Commissioner. 2. Determination of the managing agency commission to be included in the excess profits tax assessment for specified chargeable accounting periods (C.A.Ps). 3. Validity of the excess profits tax assessment made on the assessee-firm for the C.A.P. ended March 31, 1946. Issue-wise Detailed Analysis: Issue 1: Validity and Legality of the Notice of Enhancement This issue was not pressed by the assessee and thus was not considered or answered by the court. Issue 2: Determination of the Managing Agency Commission The court needed to decide whether the managing agency commission to be included in the excess profits tax assessment should be: 1. The amount received by the assessee according to the accounts of the managed company. 2. The said amount together with the estimated addition made thereto. 3. The amount as determined by the Appellate Assistant Commissioner. The assessee, an unregistered firm, was the managing agent of a company whose ships were requisitioned by the Government during WWII. The Government made provisional payments with an understanding that additional payments would be due. These additional payments were later received and apportioned over the accounting periods. The Excess Profits Tax Officer initially included estimated commissions in the assessments due to the future claims from the Government. The Appellate Assistant Commissioner, upon receiving actual amounts, revised the assessments and issued notices of enhancement. The Tribunal upheld the Appellate Assistant Commissioner's decision, rejecting the assessee's contention that its commission should be based solely on actual receipts during the period without adjustments for future payments. The court agreed with the Tribunal, emphasizing that the right to receive commission accrued during the relevant periods, and future payments were anticipated and subject to adjustment. The managing agency agreement and the balance sheets indicated that commissions were not final but subject to future adjustments. The court also noted that the assessee's auditor had acknowledged the potential for future adjustments. Issue 3: Validity of the Excess Profits Tax Assessment for C.A.P. Ended March 31, 1946 The court had to determine if the excess profits tax assessment for the period from July 1, 1945, to March 31, 1946, was valid, given that the right to receive commission accrued on June 30, 1946. The court noted that the chargeable accounting period was defined as any period falling wholly or partly within the term ending on March 31, 1946. Profits for such periods should be computed and apportioned as per the third proviso to Rule 1 in Schedule I of the Excess Profits Tax Act. The court rejected the assessee's argument that no apportionment should be made because the commission accrued after the chargeable accounting period. It held that apportionment was necessary when the accounting period did not wholly synchronize with the chargeable accounting period. The court supported this view with precedents from the Bombay and Madras High Courts, which emphasized the need for apportionment when the accounting period extended beyond the chargeable accounting period. Conclusion: 1. Question 1: Not pressed. 2. Question 2: The managing agency commission to be included in the excess profits tax assessment is the amount as determined by the Appellate Assistant Commissioner. 3. Question 3: The Tribunal was not justified in holding that the excess profits tax assessment made on the assessee-firm for the C.A.P. ended March 31, 1946, was not valid in law. The assessee was ordered to pay the costs of the revenue.
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