NAROTTAM MORARJI AND CO Vs. COMMISSIONER OF EXCESS PROFITS TAX

JUDGEMENT

(1.) THIS reference is made both at the instance of the assessee and the Revenue and the questions referred for our determination are :

(2.) SO far as questions Nos. 1 and 2 are concerned they were referred to at the instance of the assessee while question No. 3 was referred to at the instance of the Revenue. At the outset we may state that even though the assessee has got question No. 1 referred to us it has not been pressed and it is not necessary for us to consider that question and answer the same.

(3.) THE ships of the managed company were requisitioned by the Government during the second world war. The terms of payment of the compensation were not settled at the time of the requisition, but as regards the tenor of the agreement with the Government the Tribunal has accepted what was found by the AAC who in his order stated "What the Government did was to make payments to the managed company for the requisitioned ships at provisional rates, but it was clearly understood between the parties that substantial additional payments would be due for the ships thus supplied on requisition. It is of vital importance in my view to appreciate that the liability for making additional payments, i.e., over and above the payments made at ad hoc rates, was clearly agreed to and clearly constituted a part of the contract between the parties right from the inception of the contract. The Government, in fact, made additional payment on an ad hoc basis from time to time during the chargeable accounting periods in terms of this agreement, although the quantum of the total additional dues of the managed company were finally determined and adjusted in the year 1947 48". In view of this arrangement, in addition to the yearly payments at ad hoc rates, a sum of Rs. 1,22,17,667 was paid by the Government to the managed company during the period 1st, July 1945, to 30th, June 1946, when the ships were de requisitioned and the final payment on account of the hire and compensation of Rs. 43,64,026 was made during the year 1947 48.