SHARMA AND CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66 (1) of the Indian Income-tax Act.

(2.) ON the same day, March 23, 1955, the assessee informed the British India Corporation of the agreement and tendered its resignation as sole selling agent. In respect of the liquidation of the debts owed by it to the Corporation, it stated that it was entitled to receive one-seventh of the commission due to the new selling agency or to a sum of Rs. 50,000/- per annum whichever was greater until the debts with interest thereon were fully liquidated, and it authorised the Corporation to retain that amount falling due to the assessee out of the commission payable to the agency and to adjust the same to the assessee's account with the Corporation. It emphasised that the resignation, was in consideration of the terms offered by the new selling agents and accepted by it.

(3.) ON March 26, 1955, the Board of Directors of the British India Corporation held a meeting, in which the resignation of the assessee and the appointment of Messrs. M. K. Brothers were noted and a minute was recorded in the following terms: