COMMISSIONER OF INCOME TAX Vs. BALASUNDARAM AND CO

JUDGEMENT

(1.) IN this reference under Section 256(1) of the I. T. Act, 1961, the following question has been referred :

(2.) THE assessee is a registered firm and was acting as the managing agent of M/s. Textool Co, Ltd. under an agreement dated 14th August, 1965. Under Clause 5 of the said agreement, the assessee-firm agreed that it would, during the period of the agreement, act as the managing agent of the managed company for the remuneration and on the terms and conditions mentioned in it and would use its best endeavours to promote the interest and the business of the company. THE remuneration payable to it is to be found in Clause 6 of the agreement which was subject to a minimum of Rs. 50,000 and it was in accordance with the graded scale usually to be found in managing agency agreements, depending on the quantum of the profits earned by the managed company.

(3.) THE actual amount paid to the broker is only Rs. 58,360 and the sum of Rs. 8 represents certain bank charges. Hence, a sum of Rs. 58,368 was the subject of consideration by the Tribunal.