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PETITIONER: THE COMMISSIONER OF INCOME-TAX, DELHI
Vs.
RESPONDENT: THE DELHI FLOUR MILLS CO., LTD., DELHI
DATE OF JUDGMENT: 03/10/1958
BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. AIYYAR, T.L. VENKATARAMA GAJENDRAGADKAR, P.B.
CITATION: 1959 AIR 185 1959 SCR Supl. (1) 28 CITATOR INFO : RF 1961 SC 692 (12)
ACT: Excess Profits-Assessment-Assessee company’s agreement with managing agents-Commission on net profits-Computation -Tax, if can be deducted-- " Net profits ", meaning of.
HEADNOTE: An agreement between the assessee company and its managing agents provided : " In consideration for acting as managing agents the company should pay to the firm remuneration at Rs. 750/- p.m............. and in addition a commission equal to of the annual net profits. Such net profits will be arrived at after allowing the working expenses, interest on loans and due depreciation, but without setting aside anything to reserves or other special funds ". The question was whether the excess profits tax payable by the company should be deducted from its profits for the purpose of arriving at the annual net profits of which a percentage should be paid to the managing agents as their commission under the agreement. Held ’ that,, the words " net profits " in the agreement meant divisible profits, profits divisible between the company and ...