COMMISSIONER OF INCOME TAX Vs. INDIA UNITED MILLS LIMITED

JUDGEMENT

(1.) IN this case, at the instance of the Revenue, two questions are referred for our determination and they are as under :

(2.) THE assessee company consists of a group of cotton textile mills containing five units some of which are composite and some of which are not composite. For the year of account 1948, relevant to the asst. year 1949 50, the assessee company submitted a return of income showing a net profit of Rs. 59,71,594 as per its books of account. M/s Agarwal & Co., a partnership firm, was the managing agent of the assessee company. The managing agency firm consisted of certain partners some of whom were individuals and the others were firms. The management of the various mills as a group was divided amongst the individuals and firms for the sake of convenience. The distribution of the various mills amongst the individuals and firms was as follows :

(3.) AT the time of the assessment the ITO did not accept the income as disclosed by the assessee company and applying the proviso to S. 13 of the Indian IT Act, 1922, assessed the company on a total income of Rs. 1, 18,03,914. Thus, having regard to the proviso to S. 13, he added sum of Rs. 76,92,566 as and by way of profits of the year to the amount already disclosed.