A.N.Sen, J. - (1.)This is a reference under Section 66(1) of the Indian Income-tax Act, 1922.
(2.)The assessee, M/s. Siewart & Dholakia (P.) Ltd., is a private limited company and its main activity is acting as tea brokers and tea agents for foreign buyers. One of the assessee's principal foreign constituents was M/s. Joseph Tetley & Co. Ltd. of London for whom the assessee acted as the sole buying agent of tea on commission. One Mr. R. T. Gardner was employed by the assessee on the recommendation of M/s. Joseph Tetley & Co. Ltd. as a tea tester for a term of three years from April, 1951. There was, however, no written agreement of service between the assessee-company and Mr. Gardner. In November, 1952, Mr. Gardner left the assessee's service after giving one mouth's notice and took employment with M/s. Duncan Bros. Ltd., a well-known firm of tea brokers of Calcutta. Shortly thereafter, M/s. Joseph Tetley & Co. Ltd. transferred their business from the assessee to M/s. Duncan Bros. Ltd. The assessee filed a suit in the Calcutta High Court against M/s. Duncan Bros. Ltd. and Mr. Gardner (being Suit No. 1687 of 1953), claiming a sum of Rs. 6 lakhs as damages under the following heads : -------------------------------------------------------------------------------- Rs. -------------------------------------------------------------------------------- (1) Damages for loss of service of Mr. Gardner 51,000 (2) Expenses incurred by the assessee for Mr. Gardner 49,000 (3) General damages arising from loss of business 1,50,000 (4) Special damages resulting from the transfer of business from Messrs. Joseph Tetley & Co. Ltd. 3,50,000 -------------------------------------------------------------------------------- Rs. 6,00,000 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
(3.)On the 28th of February, 1955, a consent decree was passed and the material portion of the decree provides :
" It is ordered and decreed that the defendants (i.e., Robert Tomson Turner and Duncan Bros. & Co. Ltd.) do pay to the plaintiff (i.e., the assessee) a sum of Rs. 50,000 in full satisfaction of its claim and costs of this suit and it is further ordered and decreed that the plaintiff-company do retain the sum of Rs. 5,000 or any other sum already paid or held by the attorneys for the defendants. And it is further ordered and decreed that the said attorneys for the defendants do pay to the attorneys for the plaintiff-company the said sum of Rs. 5,000 if held by them. "