1969 (6) TMI 11

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..... agents were entitled to a remuneration, by way of commission, equal to 10 % of the net profits subject to a minimum payment of Rs. 20,000. The assessee claimed deduction of the managing agency commission amounting to Rs. 48,735. The Income-tax Officer found that the commission was worked out at 10 per cent. of the net profits including the agricultural profits amounting to Rs. 97,407. The Income-tax Officer was of the opinion that the assesee was entitled to claim as deduction from the textile profits only the remuneration at 10 per cent. of the profits which are subjected to income-tax. He disallowed a sum of Rs. 9,741 out of the managing agency remuneration. On appeal, the Appellate Assistant Commissioner confirmed the order of the Inco .....

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..... n at 10% of the net annual profits of the company as defined under section 87(c) of the Indian Companies Act, 1913, provided that such commission shall be subject to a minimum payment of Rs. 20,000 in the case of absence or inadequacy of profits. The said agreement further provides for the offices and the duties and functions of the managing agents and also states that the general management of the company affairs, business, assessment, property and factory is to be entrusted to the managing agents. Dr. D Pal, learned counsel for the assessee, contended before us that no part of the managing agency remuneration could be specifically attributable to agricultural operations and as such no part of such managing agency commission could be d .....

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..... rest, after meeting the requirements of the factory, was disposed of at times. For the purposes of its business the assessee had appointed managing agents and the total remuneration which was debited in the profit and loss account to the assessee for the relevant year as its business expenditure in respect of its managing agency commission was Rs. 4,86,228-6-0. In the relevant year of account the assessee had shown that out of its profits amounting to Rs. 39,70,000 the profit relating to agricultural income would be about Rs. 28,00,000. On that proportion the Income-tax Officer in that case apportioned the item of expenditure of the managing agency commission and out of the total managing agency commission of Rs. 4,86,228-6-0 he held that .....

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