RAMANLAL KAMDAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred by the Tribunal under Section 256(1) of the Income-tax Act, 1961.

(2.) C.T. Narayana Chettiar and Ramanlal Kamdar entered into a partnership on 10th April, 1950, to carry on business in the manufacture of stainless steel and utensils. The terms of the partnership were reduced to writing on 12th February, 1952. Narayana Chettiar was the financing partner and Ramanlal Kamdar, the working partner. The firm carried on business under the name and style of Indo-Metal Industries.

(3.) IT will be seen from the above table that while the turnover in the agency goods was only Rs. 2,80,000 in 1953-54 it has gone up to Rs. 14,72,734 in the accounting year. 1959-60, while the dealings in the other goods were of the value of Rs. 1,18,958 in 1959-60. Oh March 15, 1959, the agency firm wrote to the assessee-firm asking for the enhancement of the commission from 5% to 10% pointing out that its purchases from others had gone down, that the cost of living had gone up, that other manufacturers like Vummidiars (Mfgs.) Private Ltd. and Mysore Premier Metal Factory were allowing 10% to their dealers and that unless the commission was increased from 5% to 10%, it might not be possible for them to continue the agency. On 1st April, 1959, an agreement was entered into between the assessee and the agency firm increasing the commission from 5% to 10%.