- (1.) THIS is a case referred to this Court by the Income-tax Appellate Tribunal (Delhi Bench)under Section 66 (2), Income-tax Act read with Section 21, Excess Profits Tax Act of 1940 under an order of this Court dated 7-6-1951. The questions, which this Court is called upon to answer, are : " (1) Whether there is any material for the finding of the Tribunal that the applicant is carrying on the business within the meaning of Section 2 (5), Excess Profits Tax Act of 1940?
(2.) WHETHER the income from 'dalali', 'shagirdi' and interest charged to partners is chargeable to excess profits tax?" 2. In the statement of the case the Tribunal has stated that the assessee is a registered firm carrying on business mainly in cloth and also acts as sale-agents of the Delhi Cloth Mills and the lyallpur Cotton Mills on commission basis. At p. 2 of the statement of the case it is stated: "the appellant registered firm of three partners derives income from substantial piecegoods business. This consists of selling goods of Delhi Cloth and Lyallpur Cotton Mills on commission basis. It is evident that he deals in ready goods. Instead of selling them on his own risk, he sells them at the risk of manufacturers and charges commission for the work that he puts in. He has in this way made it a business of selling ready goods of his principals on commission basis. He has sufficient knowledge of the market to push up sales. The relationship between the principal and the agents is not that of a master and a servant. He is allowed commission of 1 1/2 per cent. on all the total sales and is also responsible for bad debts. There is no element of strictly professional nature involved in the conduct of this agency. Keeping these facts in view it would thus appear that the income earned by him is that from business and not from profession. In view of this state of affairs various amounts received by him whether as commission or as compensation are in the nature of business receipt and are as such assessable to Excess Profits tax. "
(3.) THE Excess Profits Tax in dispute is for the chargeable accounting periods 1943, 1944 and 1945. The submission on behalf of the tax payer is that the commission, which they have derived from the Delhi Cloth Mills or the Lyallpur cotton Mills, is not profit of business as defined in section 2 (5), Excess Profits Tax Act, 1940, and fs not liable for payment of any Excess profits-tax. Submission is also made that 'dalali' and 'shagirdi', which they have received from the customers, is also not liable to Excess Profits-tax.;