J K WOOLLEN MANUFACTURERS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under section 66(1) of the Income-tax Act. The question referred to this court for opinion is :

(2.) THE facts giving rise to the reference are : THE assessee is a private limited company. It succeeded to the business of a partnership. THE partnership business was started on May 1, 1944. From the very commencement of the business one J.P. Vaish was appointed its general manager and he continued to be the general manager of the partnership business until June 30, 1947. It may be stated that the accounting period of the partnership business ended every year on the 30th June. On July 8, 1947, Sri J.P. Vaish died. On July 12, 1947, his widow wrote a letter to the proprietors of the firm claiming gratuity equal to the salary and commission earned by him for the accounting year 1946-47, estimating the claim rightly at Rs. 87,000. On July 17, 1947, the claim was admitted to the extent of only Rs. 38,509, which is roughly equal to one-third of the salary and the commission earned by him from July 1, 1944, to June 30, 1947. THE amount was paid to the lady on May 22, 1948.

(3.) QUESTION answered in the affirmative.