V.G.OAK, J. - (1.) THIS is a reference under S. 66 of the Indian IT Act, 1922. The assessee, Maheshwari Khetan Sugar Mills Ltd. is a private limited company. Another firm, "Devi Dutt Chaturbhuj," Gorakhpur," was the managing agent of the assessee -company. Under the managing agency agreement, a sum of Rs. 55,359 was payable by the assessee to the managing agent as commission. The assessment year is 1950 -51. The corresponding previous year ended on September 30, 1949. At first the assessee - company made a debit entry in its account books for the sum or Rs. 55,359 towards commission of the managing agent. But the managing agent agreed to forgo the commission. Consequently, entries were reversed in the books of the assessee -company. The result was that there was no debit under this head in the profit and loss account of the assessee - company. The question arose at the time of the deduction of Rs. 55,359 as expenditure during the previous year. The ITO decided that the assessee -company was not entitled to any such deduction. This decision was confirmed in appeal by the AAC and by the Tribunal. Under the directions of this Court, the Tribunal has referred two questions of law to this Court. The two questions are : (1) Whether, on the facts and in the circumstances of the case, the assessee -company is entitled to a deduction of Rs. 55,359 as managing agency remuneration ? (2) Whether, on the facts and in the circumstances of the case, the sum of Rs. 55,359 forgone by the managing agent after the end of the relevant previous year is a Revenue receipt of the assessee -company and liable to income -tax for the said year ?"
(2.) IT was conceded for the assessee that the sum of Rs. 55,359 was never paid to the managing agent during the previous year ending on September 30, 1949. It has been found that, in view of the managing agent's waiver, this sum is not at all payable by the assessee -company to the managing agent. The main contention advanced on behalf of the assessee before the Tribunal was that the assessee -company should get a deduction for this amount of Rs. 55,359, because this sum was included in the assessment of the managing agent for the asst. year 1950 -51. The Tribunal has rightly pointed out that what has or has not been included in the assessment year of a different assessee is irrelevant for the purpose of ascertaining the amount that is to be assessed in the case of the assessee -company. Admittedly the assessee -company did not pay any commission to the managing agent during the accounting period ending on September 30, 1949. The fact that the amount of Rs. 55,359 was included in the assessment of the managing agent for the asst. yr. 1950 -51 has no bearing on the assessment of the assessee -company for the same year.
(3.) THE learned counsel for the assessee suggested that consequent adjustment in the books of the assessee -company might have taken place some time after September 30, 1949. No such contention appears to have been advanced before the Tribunal. Nonetheless we have considered this point raised on behalf of the assessee.;