Judgement

DAS, CJI. : This is an appeal from the judgment and order of the High Court of Bombay delivered on September 11, 1953, on a reference made by the Income-tax Appellate Tribunal under S. 66 (1) of the Indian Income-tax Act, whereby the High Court answered the referred question in the affirmative and directed the appellant to pay the costs of the respondent.

2. The appellant, which is a registered firm and is hereinafter referred to as "the assessee firm" was appointed the managing agent of Godrej Soaps Limited (hereinafter called the "managed company"). It has been working as such managing agent since October 1928 upon the terms and conditions recorded originally in an agreement dated October 28, 1928, which was subsequently substituted by another agreement dated December 8, 1933, (hereinafter referred to as "the Principal Agreement ). Under the Principal Agreement the assessee firm was appointed Managing Agent for a period of thirty years from November 9, 1988. Clause 2 of that Agreement provided as follows :

"The Company shall during the subsistence of this agreement pay to the said firm and the said firm shall receive from the company the following remuneration, that is to