B GUHA AND CO Vs. COMMISSIONER OF INCOME TAX DELHI
HIGH COURT OF PUNJAB AND HARYANA
B. GUHA AND CO.
COMMISSIONER OF INCOME-TAX, DELHI
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Bishan Narain, J. -
(1.) The facts leading to the present reference under Section 66(1) of the Income- tax Act may be briefly stated. Messrs. B. Guha and Co., New Delhi (the assessee), were the Chief agents of the Bombay Mutual Life Assurance Company, Limited, for certain areas in Northern India for several years under an agreement of agency which was renewed from time to time. The last agreement was executed in 1949 and was effective from 1-7-1947 to 31-12-1951. Under this agreement the assessee Company was entitled to receive a certain percentage of premiums paid to the Insurance Company as "renewal commission". This agreement was terminated with effect from 31-8-1950 A fortnight later, ie., on 14-9-1950, the assessee was re-appointed chief agent of the Insurance Company on certain new terms which conformed to the provisions of the Insurance Act as amended in the year 1950. At the time of the termination of 1949 agreement certain amounts as renewal commission were due to the assessee and the Insurance Company agreed to pay half of this commission in a lump sum which was calculated at Rs. 38,937/-. This amount was paid during the assessment year 1951-52. The agents, however, represented that the amount was an inadequate and incorrect actuarial valuation of half of the commuted renewal commission payable to them. The Insurance Company then reconsidered the matter and paid an additional amount of Rs. 13,628/-to the assessee. This payment was made during the assessment year 1952-53, but the present case is not concerned with that assessment year. Apparently, the other half portion of the renewal commission remained payable to the assessee as and when it accrued under the terms of the terminated agreement. At the request of the assessee the Appellate Tribunal has drawn up a statement of the case under Section 66(1) ofthe Indian Income-tax Act and has referred the following question of Law to this Court for decision : "Whether on the facts and in the circumstances of this case, the sum of Rs. 38,937/- received by the assessee during the relevant accounting period as commuted value of half of the renewal commission to which he was entitled under the terms of the agreement, was receipt in the nature of a revenue receipt?"
(2.) The question, therefore, that requires determination in this case is whether the amount of Rs. 38,937/- was paid as a revenue receipt or as a capital receipt. Now, the assessee's case before us was that this amount was received as compensation for loss of employment and the fact that the assessee was subsequently reemployed by the Insurance Company would not affect the nature of the payment under consideration in this case. In the alternative it was argued that this payment was receipt in the nature of capital receipt. In the present case it may be state of that we are concerned with the receipt of a certain amount by the assessee and therefore we have to look at it from the point of view of the recipient and not that of payer.
(3.) I proceed to deal with the first point raised by the learned counsel. Under the 1949 agreement the assessee was entitled to receive renewal commission. The payment of this commission was not dependent on continuation or cessation of this agreement. This commission by the nature of things was. payable during the continuation of the agreement and also after its termination. Admittedly, the assessee could recover this amount from the Insurance Company by process of law whether the right was enforced during the currency of the agreement or thereafter. On 31-8-1950 when the agreement was terminated, admittedly renewal commission was due to the assessee from the Insurance Company. The parties concerned then agreed to commute half of this renewal commission to which the assessee was entitled. There is nothing in the statement of the case under consideration, nor is there any material before us to suggest that this agreement relating to commutation could not be arrived at during the currency of the 1949 agreement or that this commutation was a consideration for terminating the agency agreement at that time. Indeed, such a case was not made out before the Appellate Tribunal at the stage of the appeal before it, nor has it been mentioned in the present statement of the case. It is settled law at least in this Court that if a point is not urged before the Appellate Tribunal at the stage of appeal, it cannot be decided in proceedings under Section 66(1) or under Section 66(3) of the Income-tax Act: Commr. of Income-tax, Delhi, Ajmer, Rajasthan and Madhya Bharat, Delhi v. S. B. Ranjit Singh, 57 Pun LR 415 (A) and Mash Trading Co. v. Commr. of Income-tax, 58 Pun LR 375 (FB) (B). On the merits also there is no substance in this contention. It is admitted that during the currency of the 1949 agreement the parties could agree to commutation of the renewal commission wholly or in part and therefore it cannot be said that the commutation in the present case was compensation for terminating the 1949 agreement. There is no suggestion that the assessee would not have agreed to the termination of the agency it the Insurance Company had not agreed to commute half of the renewal commission.;
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