COMMISSIONER OF INCOME TAX MADRAS Vs. K R M T T THIAGARAJA CHETTY AND CO

JUDGEMENT

(1.) These three appeals arise from the judgment and order of the Madras High Court dated 2-2-1950, delivered on a reference by the Income-tax Appellate Tribunal (hereinafter referred to as 'The Tribunal'), whereby the High Court answered the first referred question in the negative, and as regards the second question Satyanarayana Rao, J. answered it in the affirmative, while Viswanatha Sastri J. answered it in the negative, as a result of which the judgment of Satyanarayana Rao J. ultimately prevailed. They relate to the assessment for 1942-1943 and are filed by the Commissioner of Income-tax, while Appeal No. 132 of 1952 which relates to 1943-1944 is filed by the assessee, and is dealt with separately.

(2.) The two questions which were referred in respect of the first group of appeals are as follows :

(3.) The assessee is a registered firm (hereinafter referred to as 'the firm') consisting of K. R. M. T. T. Thiagaraja Chetiy and his two sons. The firm is the managing agent of Shri Meenakshi Mills, Ltd. (hereafter referred to as the Company) owning a spinning mill at Madura. The firm also conducted insurance business and the business of ginning cotton in a ginning factory at another place. Under the terms of the agreement the managing agents word entitled to a remuneration of Rs. 1,000 per mensem and a commission of 1/2 per cent. on all purchases, 1 per cent. on all sales and 10 per cent, commission on the net profits of the mills before allowing for depreciation. The firm had plenary powers of management of the affairs of the company subject to general supervision of the Directors. It was to have charge and custody on behalf of the company of all the property books of accounts, papers and documents and effects belonging to the company.