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On January 25, 1944, members of the Gupta family paid to the share-holders of the Singhania family of the company the price of the shares held by them. Thereafter, the company consisted entirely of members of the Gupta family and the Singhania family ceased to have any interest in it. under the award itself with effect from January 25, 1944, the rate of payment of the price of the shares to the shareholders of the Singhania family, the members of the Singhania family ceased to be partners of the firm exclusively of members of the Gupta family though with a liability to change in the name by deletion of the word "Kailashpat". On January 27, 1944, the firm decided to change the name of Beharilal Ramcharan and drew up a fresh partnership deed and informed the company of the change in its name and its constitution. The company on March 31, 1944, approved of the change in the name and constitution of the firm. On May 25, 1944, the old Singhania partners of the firm wrote to the directors of the company protesting against the recognition of the firm, Beharilal Ramcharan, as its managing agents in the place of Beharilal Kailashpat and contended that the recognition did not bind them or the firm, Beharilal Kailashpat. The directors sent a copy of the letter to Beharilal Ramcharan for its comments and sent an inter in reply to the Singhanias that thy had ceased to have any interest in the firm, Beharilal Kailashpat, and that the remaining partners had changed its name to Beharilal Ramcharan. Beharilal Ramcharan on June 26, 1944, informed the directors of the company that the award of Sri Kanhaya Singh was binding upon the Singhanias, who were parties to it, and that they were not justified in protesting against Beharilal Ramcharan being recognized as the companys managing agents. The directors sent a copy of this reply to the Singhanias in continuation of this interim reply. On July 18, 1944, the Singhanias, as representing Beharilal Kailashpat, wrote to the directors of the company contending that the award was not final and binding and they had filed an objection against it as also against the very reference to the arbitration, that if it still recognized Beharilal Ramcharan as its managing against it would do so at its own risk and would continue to be responsible to Beharilal Kailashpat and its partners for all loss that may accrued to it or them and that Beharilal Ramcharan could not be treated as a continuation of Beharilal Kailashpat because no original partner of Beharilal Kailashpat was a partner of Beharilal Ramcharan. When the partnership, Beharilal Kailashpat, was formed in 1935, none of Ram Ratan Gupta, Ram Prasad, Ram Devi and Keshobai was its partner but that was immaterial. Partners of Beharilal Kailashpat kept on changing and the members Gupta family who are partners in 1935 ceased to be partners and in 1943 the partners representing the Gupta family were Lala Ram Ratan Lal, Ram Prasad, Srimati Ram Devi and Srimati Keshobai and under the award they were entitled to continue the partnership under a changed name. The directors sent a copy of this second letter of the Singhanias to Beharilal Ramcharan on July 27, 1944, and stated that as the validity of the award was vehemently contested in a court of law it would not be safe for the company to recognize anybody other than Beharilal Kailashpat as its managing agents. In reply Beharilal Ramcharan wrote to the directors contending that the award so long as it was not set aside bound all and that the objection that none of the original partners of Beharilal Kailashpat was a partner of Beharilal Ramcharan was without any substance because Lala Ram Ratan Gupta was an original partner. On September 20, 1944, the directors of the company wrote to, (1) Beharilal Ramcharan, and(2) the Singhania partners of Beharilal Kailashpat that the company had decided not to recognize anybody other than Beharilal Kailashpat as its managing agents, that it could not safely continue to interest its management and affairs in the hands of Beharilal Kailashpat and that consequently it had decided to terminate the managing agency agreement with effect from September 30, 1944. The Singhanias replied on September 25, 1944, that the termination of the agreement was mala fide, unjustifiable and wrongful because for 99 years Beharilal Kailashpat could not be removed from the office of managing agents and called upon the directors to revise the decision and restore Beharilal Kailashpat to the managing agency or pay it adequate damages and compensation for the wrongful termination of the agreement. The reply from Beharilal Ramcharan came later on October 5, 1944; it also attacked the termination of the managing agency agreement and removal of the managing agents from office as unjustifiable, improper and wrongful and called upon the directors either to restore it to the office of managing agents or pay Rs. 40,00,000 as compensation for the wrongful termination. On September, 30, 1944, the directors informed the Singhanias that they could not review their decision and that their claim for compensation was misconceived and the agreement had to be terminated on account of quarrels and conflicts among the partners. The Singhanias as partners of Beharilal Kailashpat and that the company was liable to pay Rs. 30,00,000 as compensation to the Singhanias for the wrongful termination of the agreement and removal of Beharilal Kailashpat from the office of managing agents. On October 9, 1944, the company informed (1) the Singhanias, and(2) Beharilal Ramcharan, refuting their claims to compensation and suggesting reference of the dispute to the arbitration of any of the five named persons including Sri K. M. Munshi. The Singhanias and the partners of Beharilal Ramcharan, jointly entered into an agreement on October 19, 1944, referring to the arbitration of Sri K. M. Munshi the dispute whether the termination of the agreement and the removal from the office of Beharilal Kailashpat or its alleged successor, Beharilal Ramcharan, was wrongful and, if it was wrongful, to what compensation, if any, were the ex-managing agents entitled.

The ex-Singhania shareholder of the company brought a suit against the Gupta shareholders for a share in the goodwill of the company. The company itself was not a defendant to the suit and actually it was not a necessary party at all. The suit ended in a compromise between the parties on January 11, 1945. Under the compromise the company was added as a defendant to the suit and it joined in the compromise. All the parties to the suit agreed to modify the award of Sri Kanhaya Singh and it was held to be valid and binding on all. Under the modified award the company also because with retrospective effect a party to the reference. There was no modification in the award as regard the company; there were some modifications as regards Beharilal Kailashpat. The shares in the partnership of Lady Ansuiya Devi, Shrimati Pushpavati Devi, Vijaipat and Ajaikumar were specified and it was declared that they would cease and determine with effect from January 25, 1944, and the Singhania partners would be deemed to have retired and withdrawn from that date and the remaining partners of the Gupta family would be entitled to continue the managing agency business, if they so liked, in their own partnership or in partnership with others but after excluding the name "Kailashpat" from the firm name. Any sum to be awarded by the arbitrator, Sri K. M. Munshi, as compensation to Beharilal Kailashpat for the wrongful termination of the managing agency agreement should be paid to, and retained, by the continuing partners and irrespective of the result of the arbitration before Sri K. M. Munshi, the continuing partners should pay to the Singhania partners a sum of Rs. 8 lakhs as representing their share in the compensation for the wrongful termination of the managing agency agreement and this payment should be in full satisfaction and discharge of all claims and demands whatsoever of the Singhania partners on and to the assets, goodwill and contracts of Beharilal Kailashpat with the company and also in full satisfaction and discharge of the claim made by them against the company for compensation for the termination of the agreement. An option also was given to Lala Ram Ratan Gupta if he was not in a position to purchase the shares of the Singhania shareholders in the company : this was meaningless because the shares had already been purchased by him on payment of the price.

Before I take up the questions that we have been called upon to answer I must reproduce the essential facts. The payment in dispute (barring the small amount of costs of arbitration and the arbitrators fee) was made by the assessee to the Gupta, e.g., to the partners of Beharilal Ramcharan and in implementation of the compromise decree dated January 11, 1945. Though the payees were also partners, belonging to the Gupta family of Beharilal Kailashpat, the payment was made to them not on account of their being partners of Beharilal Kailashpat but on account of their being partners of Beharilal Ramcharan. The compromise decree made it clear that the payment was to be made to the continuing partners, e.g., the partners of Beharilal Ramcharan. The award of Sri K. M. Munshi directed the payment to be made in accordance with the compromise decree, i.e., to the partners of Beharilal Ramcharan. The Singhanias ceased to be the partners of Beharilal Kailashpat on account of their interest in the partnership having been transferred to the Gupta partners under Sri Kanhaya Singhs award. The Singhanias acquiesced in the transfer of their interest to the Guptas by voluntarily accepting the price of their shares in the assessee-company. The managing agency agreement permitted the transfer of interest by some partners of Beharilal Kailashpat to others and made it clear that in the even of such transfer the reconstituted partnership would be deemed to be the managing agency; consequently, Beharilal Ramcharan became the managing agents of the assessee. The assessee could, and did, recognize not only the change in the name of the partnership but also the change in its constitution. The compromise decree of January 11, 1945, confirmed the validity of Sri Kanhaya Singhs award after certain modifications; the modifications did not touch the transfer of the Singhanias interest in the partnership of the Guptas. Whatever might have been the Singhanias right to challenge to award prior to January 11, 1945, with effect from that the date they became bound by it, i.e., they were deemed to have retired from Beharilal Kailashpat with effect from January 25, 1944, and Beharilal Ramcharan became the legal managing agents of the assessee. The Singhanias ceased to have any interest in the managing agency with effect from January 25, 1944; they ceased to be partners of Beharilal Kailashpat and the partnership itself became Beharilal Ramcharan. They admittedly had no interest in Beharilal Ramcharan. On September 30, 1944, when the assessee purported to terminate the managing agency agreement, the managing agents were Beharilal Ramcharan and not Beharilal Kailashpat. Beharilal Kailashpat, had ceased to exist long before September 30, 1944. If anybody could be aggrieved by the termination of the agreement, it was Beharilal Ramcharan and not Beharilal Kailashpat, e.g., the Guptas and not the Singhanias. As on the September 30, 1944, the managing agents were Beharilal Ramcharan consisting wholly of the Guptas, it could not be said that it was necessary to terminate the agreement on account of quarrels between the Guptas and the Singhanias. The Singhanias had retired from the partnership on January 25, 1944, and whatever might have been the doubt about the validity of this retirements imposed by Sri Kanhaya Singhs award it vanished on January 11, 1945, and the retirement became binding upon the Singhanias. They were, therefore, not hit by the assessees act of terminating the agreement on the September 30, 1944, and were not entitled to any compensation. It they were hit at all, it was by the retirement imposed under Sri Kanhaya Singhs award but they accepted it in the compromise decree and did not challenge it either before Sri K. M. Munshi or before the Tribunal. We have, therefore, to take the retirement as valid and binding upon them. Beharilal Kailashpat ceased to exist on January 27, 1944, and there was no question of its being the assessees managing agents thereafter. Beharilal Ramcharan became the managing agents with effect from January 27, 1944, and the assessee wrongly terminated the managing agency agreement and refused to recognize it as the managing agents, but this was done by the assessee consisting entirely of the Guptas. There was consequently no sense in saying that the Guptas as directors of the company terminated the agreement with themselves as constituting Beharilal Ramcharan for managing the assessees affairs. There was no question of the Guptas paying any compensation to themselves and, therefore, no question of the assessees paying any compensation to Beharilal Ramcharan for the wrongful termination of the agreement. There could not be any genuine dispute between the Guptas as representing Beharilal Ramcharan and the proceedings for arbitration before Sri K. M. Munshi were undertaken with an oblique motive. The compromise decree of January 11, 1945, anticipated a direction by Sri K. M. Munshi in the award that the assessee should pay compensation to Beharilal Kailashpat for the alleged wrongful termination of its managing agency agreement; not only this but it further anticipated that the amount to be awarded was much more than Rs. 8 lakhs (because out of it Rs. 8 lakhs were to be paid by the Guptas to the Singhanias as their share in the compensation). Although Beharilal Kailshpat did not exist after January 26, 1944, and did not suffer by the assessees termination of the agreement on September 30, 1944, Sri K. M. Munshi directed the assessee to pay compensation to Beharilal Kailashpat for the so-called wrongful removal. The award of Sri K. M. Munshi was against the facts and the law applicable to them and the only explanation that can justify such an award is that it was asked for by the parties themselves. Thus the assessee, regardless of the facts and the law applicable to them, itself volunteered to make the disputed payment and the arbitrator was persuaded to accept its offer. No decree was passed on the basis of the Sri K. M. Munshis award and so along as this had not been done ordinarily the assessee was not bound to make the payment.

Question No. 2. - This question is of fact and was not mentioned in the applications under section 66(1) and (2) and could not have been called for by this court either under section 66(2) or under section 66(4). It should, therefore, be left unanswered. It was not disputed that if the remuneration fixed under the managing agency agreement was partly for the managing agents promoting the company, part of the payment made to them for the wrongful termination of the agreement would be for their promoting the company and consequently not a revenue expenditure. Whether a part of the remuneration to be paid to the managing agents was for their promoting the company or not was a pure question of fact, which cannot be answered by this court. It could be answered only by the Tribunal and it has found that a part of the remuneration was for the managing agents promoting the company. The only question of law that could possibly arise from this finding was whether it was supported by any material and even this question would have to be answered against the assessee. It is not correct that Beharilal Kailashpats promoting the company was the consideration only for the term of 99 years fixed for the duration of the agreement and was not the consideration for any other promise made by the assessee. Actually all the promises made by the assessee formed one undertaking and agreement and the whole undertaking and agreement was governed by the words "in further consideration of the firm having promoted the company", even though the various promises were separated by full stops. The words "the company hereby promise and agree" have to be read with all the promises made by the assessee, notwithstanding the full stops separating one from the next. Therefore, the entire undertaking consisting of all the promises was partly on account of the firms having promoted the company. As part of the remuneration paid by the assessee to the managing agents was for promoting the company, part of compensation, if paid for the so-called wrongful termination of the agreement, also must be held to be for promoting the company. It is immaterial that the payment was made to the Guptas as representing Beharilal Ramcharan which came into existence after the company had been formed; Beharilal Ramcharan got what Beharilal Kailashpat would have been entitled to. Under the agreement itself, Beharilal Ramcharan took the place of Beharilal Kailashpat as managing agents and Beharilal Ramcharan and the company continued to be governed by the agreement. Consequently, even though Beharilal Ramcharan as such had not be paid to it was for Beharilal Kailashpats promoting the company and part of whatever might have been paid to Beharilal Ramcharan for wrongful termination of the agreement must be held to be for Beharilal Kailashpats promoting the company. It is equally irrelevant that the income-tax authorities had year after year deducted the whole of the remuneration paid by the company to Beharilal Kailashpat as a revenue expenditure from its income because the principle of rest judicata does not apply in taxation matters and it is open to the Commissioner of Income-tax to show that part of it was not a revenue expenditure. Whatever this court said in respect of this matter in Commissioner of Income-tax v. Ram Ratan Gupta did not bar the Tribunals finding that part of the payment was for promoting the company. This court did not find that the promotion of the company by Beharilal Kailashpat was consideration only for the term of 99 years and not for other promises made to it. The question whether part of the remuneration fixed for it was not in consideration of its promoting the company was not discussed by it at all.