J K STEEL AND INDUSTRIES LTD Vs. COMMISSIONER OF INCOME TAX
LAWS(CAL)-1976-6-6
HIGH COURT OF CALCUTTA
Decided on June 18,1976

J.K.STEEL AND INDUSTRIES LTD. Appellant
VERSUS
COMMISSIONER OF INCOME-TAX Respondents





Cited Judgements :-

SHERVANI SUGAR SYNDICATE P LIMITED VS. COMMISSIONER OF INCOME TAX [LAWS(ALL)-1980-3-6] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. PAAREL IMPORTS AND EXPORTS (P) LTD. [LAWS(KER)-2008-3-79] [REFERRED TO]
DAVINDER SINGH VS. COMMISSIONER OF INCOME TAX [LAWS(P&H)-2007-3-384] [REFERRED TO]


JUDGEMENT

Dipak Kumar Sen, J. - (1.)In this reference under Section 66(1) of the Indian Income-tax Act, 1922, the question before the court is :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the entire payment of selling agency commission was not an allowable deduction in computing the income from business but only a portion thereof was allowable for the assessment years 1960-61 and 1961-62 under the Indian Income-tax Act, 1922 ?"

(2.)The reference is at the instance of M/s. J. K. Steel & Industries Ltd., Calcutta, the assessee. The assessment years involved are 1960-61 and 1961-62, the relevant previous years ending on the 30th June, 1959, and 30th June, 1960, respectively.
(3.)The facts found or admitted are that the assessee is a public limited company and carries on the business of manufacture of jute bailing, hoops, steel wire ropes and box strapping. The assessee was incorporated on the 13th October, 1953, and by a resolution dated the 13th November, 1953, it appointed one J. K. Alloys Ltd. as its sole selling agent for a term of five years, In the assessment years involved in this reference the said J. K. Alloys Ltd. ceased to be the sole selling agent and another concern known as M/s. Nav Bharat Vanijya Ltd. was appointed as the sole selling agent for all the products of the assessee. The agreement entered into by and between the assessee and the said Nav Bharat Vanijya Ltd., on the 1st July, 1953, has been annexed to the statement of the case and forms part thereof. The material clauses of the said agreement dated 1st July, 1958, are as follows:
"1. That the agents shall act as the sole selling agent of all the products of the principal. 2. That this agreement shall commence from the 1st day of July, 1958, and shall continue unless otherwise determined earlier by mutual consent of the parties, till the 30th day of June, 1963. ............ 5. That the agents shall sell the goods of the principal at such price as may be prescribed by the principal from time to time. 6. That the principal will allow the agents commission at the rate of 11/2% (one and a half per cent.) on sale of all products of the principal effected by the agents either themselves or through sub-agents appointed by them or by the principal directly and such commission will be payable monthly on the net realised sales : Provided always that the rate of commission above mentioned may be varied by mutual consent of the parties hereto. 8. That the agents shall be responsible for payment of the prices and all other monies to the principal immediately after the goods shall leave the principal's works or godown. Such payment will be made on presentation of necessary papers or documents by the principal to the agent not later than a fortnight after the date the goods shall have been despatched. In default of payment as aforesaid the principal will be entitled to charge interest until realisation at the rate of 6% per annum on the balance for the time being outstanding. 9. That the agents will be responsible for the due performance of all contracts made by them whether for ready or forward sales and also for the consequence of any breach of contract by any customer and for all losses and damages arising therefrom to the principal provided there shall be no default on the part of the principal in manufacturing or giving of any goods required for sale under any contract in accordance with the stipulation thereof."

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