C.N.Laik, J. - (1.) This is a consolidated Reference under Section 66(1) of the Income-tax Act at the instance of the assesses in respect of three assessment years 1944-45, 1945-46 and 1946-47 where the following question has been referred: "Whether on the facts and in the circumstances at-the case the Tribunal was justified In not admitting the appeals filed by the assesses in respect of the revision of its assessments for the assessment year 1944-45, 1945-46 and 1946-47". In other words, whether the order passed by the Income-tax Officer revising the original assessment as directed--by the Appellate Tribunal would partake the character of procedural law only I.e. whether the appellant had no substantive right to prefer the appeal under Section 30 of the Act
(2.) The facts material for the purpose of the reference are: The applicant-firm Messrs. Kooka Sidhwa and Company, Calcutta, is the Managing Agent of limited concern, viz., the Globe Theatres Ltd., Calcutta. Under the terms of the agreement of the Managing Agency, Kooks Company was entitled to a remuneration of Rs. 1,000/- per month and 10% of the net profits. On August 17, 1942, the Globe Theatres Ltd. passed a special resolution increasing the remuneration of the Managing Agents to Rs. 2,000/- per month and 25% of the net profits. Despite the resolution, the Income-tax Officer assessing the Globe Theatres for the relevant assessment years, allowed the deduction in respect of Managing Agency Commission at Rs. 2,000/- per month and 25% of the net profits, as permissible expenses under Section 10(2) (iv) of the Act The Income-tax Officer disallowed the balance as expenditure not incurred wholly and exclusively for the purpose of the company's business. In the Aands of Kooka Company i.e. the assessee, the Income-tax Officer however assessed the entire amount of the Managing agency remuneration at Rs. 2,000/ per month and 25% of the net profits as the taxable income and excess profits of the firm for the relevant assessment years. The Income-tax Officer negatived the argument, as unsound which was advanced to the effect, that the Income should not be assessed twice.
(3.) When the matter came up before the Appellate Tribunal in the first instance, it held that the entire amount of the managing agency remuneration was the income in the hands of the assessee but it was exempt from Income-tax under a Notification of the Central Government, Finance Department, being Notification No. 878-F (Income-tax), dated March 21, 1922, published under the authority of Sec. 60 of the Indian Income-tax Act The Tribunal therefore, on August 31, 1950 passed the following order: "The result is that the three Income-tax appeals are allowed in part. We direct the Income-tax Officer to revise the assessments and authorise him to amend the assessments made on the partners if necessary. The excess-profits-tax appeals are dismissed".;