9911796707
TMI Blog1975 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... er was acting as the managing agent of Messrs. Kashmir Ceramics Ltd. The petitioner had entered into an agreement with the said Messrs. Kashmir Ceramics Ltd., dated the 24th of February, 1962. According to the agreement the petitioner was entitled to a remuneration of 10 per cent. of the net profit of the said Messrs. Kashmir Ceramics Ltd. It further appears that the said Messrs. Kashmir Ceramics Ltd. could not work from 1962-63 and mostly all the expenses incurred in construction were capitalised. The petitioner's case is that the petitioner did not earn or receive any remuneration from Messrs. Kashmir Ceramics Ltd. and finally the provisions of the agreement were surrendered by the petitioner ab initio in 1968. The petitioner states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the affairs of the company if it ceases to manufacture. In fact this was the plea taken by the Kashmir Agencies Pvt. Ltd. while refusing any commission to the managing agents during the period April 1, 1963, to March 31, 1968. Therefore, in my opinion, there was no operation of the managing agency during the accounting year 1963-64. Consequently, the expenses claimed by the company cannot be allowed." The reasons for reopening for the relevant assessment year were produced before me and the said reasons read as follows : " This company was appointed as the managing agent of Kashmir Ceramics Ltd., Jammu, for a period of 20 years with effect from February 1, 1962, on the strength of an agreement dated March 19, 1962. As per clause 4 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gust 22, 1968, was entered into between the managed company and the managing agent whereby the clause regarding minimum remuneration in the original managing agency agreement was deleted with retrospective effect from January 1, 1963 (the managed company followed the calendar year as their previous year). On the strength of this supplemental agreement the managed company did not charge minimum remuneration payable to the managing agents in their accounts for the year ending on December 31, 1967 (relevant for the assessment year 1968-69), and it had also written off the accumulated liability to the managing agents of Rs. 2 lakhs which represented minimum remuneration for 4 years, viz., for the assessment years 1964-65 to 1967-68. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company though not shown in the return. Accordingly, the minimum managing agency remuneration of Rs. 50,000 has escaped assessment for each of the years 1964-65 to 1967-68 due to failure on the part of the assessee to furnish fully and truly all material facts relating to its income. Hence this proposal under section 147(a)." Statement to the same effect were reiterated in the affidavit-in-opposition filed in answer to the rule nisi in this case. Therefore, it appears that the Income-tax Officer concerned now is of the opinion that minimum commission of Rs. 50,000 had accrued to the assessee for the relevant year which had escaped assessment. For coming to the aforesaid conclusion the material and relevant facts are the terms and cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant factors or not in determining the question of liability of the assessee to tax, reliance may be placed on the observations of the Supreme Court in the case of Commissioner of Income-tax v. Birla Gwalior (P.) Ltd. [1973] 89 ITR 266. But I am concerned at this stage to find out whether there were materials for the Income-tax Officer for thinking that the income of the assessee had escaped assessment or had been under assessed due to any failure or omission on the part of the assessee to disclose fully or truly all relevant and material facts. It appears that it can be said that there were some materials for believing that the income of the assessee had escaped assessment or had been under-assessed for the relevant assessment year. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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