JHAJHARIA BROS LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question referred to this Court by the appellate tribunal is as follows :

(2.) THE applicant is the managing agent of Radha Krishna Sugar Mills Ltd. Its income is mainly from the managing agency commission which it received from the mill. THE Radha Krishna Sugar Mills Ltd., was loated by a number of persons: Radha Krishna Jajharia who was karta of a joint Hindu family, Gobardhandas the Shroff and Joy Doyal Kasaria. It is stated that there was an agreement between these parties to share the managing agency commission payable by the Radha Krishna Sugar Mills Ltd. Later on, both Joy Doyal and Gobardhandas assigned their respective shares of the managing agency commission to Bhartia and Co. and Rai Bahadur Mangturam Tapuria. During the year of account, payments were made to the parties in terms of the agreement and they amounted to Rs. 32,685 and the details are set out in the statement of case.

(3.) SECTION 12A, Income-tax Act, was introduced in the year 1939 after the judgment of the Judicial Committee in Tata Hydro Electric Agencies, Ltd., Bombay v. Commissioner of Income tax, Bombay Presidency and Aden, 64 I. A. 215 : (1937) 5 I. T. R. 202 : (A. I. R. (24) 1937 P. C. 139). That SECTION 12A is in the following terms :