Dipak Kumar Sen, J. - (1.) This reference arises out of the assessment of business profits tax of Turner Morrison & Co. Ltd., Calcutta, the assessee, for the chargeable accounting period 1st January, 1948, to the 31st December, 1948, at the instance of the Commissioner of Income-tax (Central), Calcutta. Under Section 66(2) of the Indian Income-tax Act, 1922, read with Section 19 of the Business Profits Tax Act, 1947, the Tribunal has been directed to state a case on the following question: "Whether, on the facts and in the circumstances of the case, in arriving at its conclusion that the sum of Rs. 10,00,000 allowable as a deduction in computing the business profit of the assessee of the relevant chargeable accounting period, the Tribunal misdirected itself in law in basing the said conclusion upon some evidence only but ignoring other essential matters discussed in the order of the Appellate Assistant Commissioner ?"
(2.) The facts found and/or admitted in this reference are as follows : The assessee carries on business, inter alia, as managing agents of companies. On the 1st February, 1931, one Reginald Foster was appointed as the manager of the assessee under an agreement dated the 9th March, 1931, on the following among other terms : (a) The assessee Would employ from the 1st February, 1931, and Foster would act as one of the managers of the assessee in India for the period of fifteen years and thereafter for successive periods of three years at his option and the desire of Foster to continue this agreement for such periods to be notified to the assessee in writing three calendar months prior to the date upon which it otherwise would determine. (b) There would be paid to Foster by way of remuneration for his services a yearly sum equal to five per centum of the yearly net profits of the assessee. The amount of the net profit for the purpose of -this clause would be arrived at half-yearly...... (c) The said remuneration would be payable half-yearly and would become due and payable within one month from the date on which the profit and loss account for the half year would be certified by the auditors of the assessee. (d) Foster would be at liberty to terminate the agreement by six calendar months' notice in writing to the assessee and the assessee would be entitled to terminate this agreement in the event of the said Foster being unable or unwilling by reason of ill-health or other cause to devote the whole of his time and attention to the business of the assessee for a period of at least 12 calendar months.
(3.) By a supplementary agreement dated the 6th June, 1932, the rate of remuneration payable to Foster under the earlier agreement was increased from 5% to 10% of the net profits of the assessee, the other terms and conditions of the earlier agreement remaining unaltered.;