COMMISSIONER OF INCOME TAX Vs. P K DAS

JUDGEMENT

(1.) THIS is a reference under s. 66(1) of the Indian IT Act, by which the Tribunal has referred to this Court a short question of a familiar shape. The question asks whether certain payments received by a director of a company of chief agents, which was apart of the total payment made by the principal company on the termination of the chief agency, were income receipts in the hands of the director or were capital receipts. The Tribunal have held that the sums were capital receipts. The CIT, being dissatisfied, has brought up the question before us for an expression of the Court's opinion.

(2.) THE reference relates to two assessment years, namely, 1950-51 and 1951-52. It has arisen out of the following facts :

(3.) AS a consideration for the termination of the chief agency, the assurance company agreed to pay to certain persons nominated by the chief agents certain amounts which were collectively called "compensation". There were seven shareholders of the company of chief agents, namely, Mr. Amiya Kumar Sen, Mr. Anil Kumar Sen, Mr. P. K. Das, Mrs. Maya Bose, Mr. Dilip Bose, Mr. A. B. Gupta and Mr. Anupam Sen, but of them, Mr. Amiya Kumar Sen, Mr. Dilip Bose, and Mr. Anupam Sen were not to receive any payment at all. For Mr. Anil Kumar Sen, Mr. A. B. Gupta, Mrs. Maya Bose and Mr. P. K. Das, who is the assessee before us, payments at certain rates per month, to be made for a period of seven years, were provided for. A further provision was made for payment of Rs. 1,000 per month to one Mrs. A. C. Sen, who was the mother of Mr. Amiya Kumar Sen, to be made for the period of her life. Mrs. Maya Bose, it may be stated here, was the mother of Mr. Dilip Bose who was himself a director, but for whom no provision was made by the agreement. It appears, and the Tribunal has so found, that even the shareholders who were to get monthly payments under the terms of the agreement were to receive benefits which were not in proportion to their shareholdings.