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TMI Blog1952 (12) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the provisions of Section 87C of the Indian Companies Act, the Tribunal was right in directing that excess profits tax fell to be deducted before arriving at the net profit upon which a fixed percentage was allowed as managing agents' commission. On the 9th day of April, 1936, the managing agency agreement, Annexure 'C', was made between the Western Hosiery and General Mills, Limited, Delhi, hereinafter referred to as the assessee company, and Messrs. Sohan Lal and Company, hereinafter referred to as the managing agents. By clause 2 of the agreement, Annexure 'C', the remuneration of the managing agents was fixed. That provision has been altered and it is common ground between the parties that for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. 104 held that excess profits tax was to be deducted before arriving at the net profits upon which commission was to be paid to the managing agents. On the application of the assessee company under Section 66(1) of the Indian Income-tax Act, 1922, the Tribunal has referred for decision to this Court the question of law cited above. From a perusal of article 83, Annexure 'A', it is plain that the definition of the expression net profits given in article 83 does not mean divisible or distributable profits of the company for commission is to be paid to the managing agents before deducting depreciation. In my opinion, the parties have defined the expression net profits on which commission is to be paid to the managing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agents were appointed on the 9th of April, 1936, whereas Act XXII of 1936 by which Section 87C was added to the Indian Companies Act, 1913, came into force on the the 15th of January, 1937. Section 87C of the Indian Companies Act, 1913, provides that that provision has no application to cases where managing agents were appointed before the commencement of Act XXII of 1936. For the foregoing reasons I think that we must answer the question referred to us for decision by saying that in computing net profits of the company upon which commission is to be paid to the managing agents as provided by the managing agency agreement read with the revised article 83 of the articles of association of the assessee company excess profits tax is not to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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