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1 - 10 of 10 (0.34 seconds)British Sugar Manufacturers, Ltd. vs Harris (Inspector Of Taxes). on 16 December, 1937
Our attention has been drawn by the learned counsel for
the Re venue to a decision in British Sugar Manufacturers
Ltd. v. Harris (Inspector of Taxes)(1), where Greene, M. R.
clearly observed that where a person contributes to some
sort of joint adventure which ultimately results in division
of profits, it could not be construed as. a remuneration for
services. In this connection, Greene, M. R. Ob served as
follows:
J.K. Woollen Manufacturers vs Commissioner Of Income-Tax, U.P on 2 August, 1968
Reliance was also placed by counsel for the assessee
Company on the decision in J. K. Woollen Manufacturers v.
Commissioner of Income Tax, U.P.(1), where this Court
observed as follows:
Commissioner Of Income-Tax, Bombay vs M/S. Walchand & Co. (Pvt.) Ltd., Bombay on 17 March, 1967
"The question as to whether an amount claimed as
expenditure was laid out or expended wholly or
exclusively for the purpose of business, profession or
vocation as required under Section 10(2) (xv) of the
Income Tax Act . has to be decided on the facts and in
the light of the circumstances of each particular case.
x x x x In our opinion, neither the High Court nor the
Appellate Tribunal has applied the proper legal test in
this case. As pointed out by this Court in C.I.T.
Bombay v. Walchand and Co. Private Ltd., 1967-65 ITR
381= (AIR 1967 SC 1435) in applying the test of
commercial expediency for determining whether an
expenditure was wholly and exclusively laid out for the
purpose of the business, reasonableness of the
expenditure has to be adjudged from the point of r view
of the businessman and not of the Income Tax
Department. It is, of course, open to the Appellate
Tribunal to come to a conclusion either that the
alleged payment is not real or that it is not incurred
by the assessee in the character of trader or it is not
laid out wholly and exclusively for the purpose of the
business of the assessee and to disallow it. But it is
not the function of the Tribunal to determine the
remuneration which in their view should be paid to an
employee of the assessee."
Commissioner Of Income-Tax, Kerala, ... vs Travancore Sugar & Chemicals Ltd on 27 October, 1972
It would appear that in the aforesaid case the only question
was regarding the quantum of remuneration to be given to the
General , Manager and this Court observed that the
businessman must be given complete freedom to fix the terms
of his employees after taking an
(1) [1969] 1. S. C. R. 525
198
overall view of the situation. This was not at all a case
where an agreement like the present one was entered into
between the assessee Company and its agents. On the other
hand in Commissioner of Income-tax, Kerala v. Travancore
Sugars and Chemicals Ltd.(l), this Court added` a word of
caution that the test of commercial expediency should not be
applied in a mechanical manner and observed as follows:
Commissioner Of Income-Tax Poona vs M/S. Manna Ramji & Co on 29 August, 1972
In Commissioner of Income-tax, Poona v. Manna Ramji
and Company(1) this Court observed as follows:
Commissioner Of Income-Tax, Bombay vs Poona Electric Supply Co. Ltd. on 24 July, 1962
In Commissioner of Income-tax, Bombay v. Poona Electric
Supply Co. Ltd.(2) the Bombay High Court observed as
follows:
The Pondicherry Railway Company Ltd. vs The Commissioner Of Income-Tax on 26 March, 1931
In fact
in Pondicherry Railway Co. Ltd. v. Commissioner of Income-
tax, Madras(2), Lord Macmillan pointed out that a payment
made to of profits and conditional on profits being earned
cannot be legitimately described as a payment made to earn
profits. It assumes that profits have first come into
existence. But profits on their coming into existence
attract tax at that point and the Revenue is not concerned
with the subsequent
(1)95 I.T.R.664,672. (2) A.I.R.1931 P.C. 165, 170.
Dharamvir Dhir vs The Commissioner Of Income-Tax,Bihar & ... on 5 January, 1961
These observations seem to us to cover the facts of the
instant case. Having regard to the terms and conditions of
the agreement detailed and analysed above, there can be no
doubt that the agents by contributing to the investments and
by sharing the profits as also the E. losses have actually
contributed to a joint venture and ultimate division of the
profits with the principals and the agreement must be
construed as an agreement for division of the profits in
specified pro portions as mentioned therein. It is true that
in the aforesaid case on the facts found the Court held that
the transaction did not amount to a joint venture but it was
clearly pointed out in the judgment that there is a very
thin line of distinction between a contract for payment of a
share of profits simpliciter and a payment of remuneration
which is deductible in truth from the profits divisible. We,
therefore, find ourselves in complete agreement with the
observations made by Greene, M. R., which aptly apply to the
facts of the present case on the basis of the various
clauses of the agreement dated October 20, 1955. The High
Court, however, appears to have relied upon the decision in
Dharamvir Dhir's case (supra). The facts of that case appear
to be clearly distinguishable from those of the present
case.
Income Tax Rules, 1962
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