Judgement

A. K. SARKAR, J. : By an agreement made in 1936, the assessee company appointed a firm as its managing agents. The agreement provided that the managing agents would be remunerated in the manner following:

"In consideration for acting as Managing Agents the Company should pay to the firm remuneration at Rs. 750 p.m. or such principal sum as may from time to time be deemed reasonable by the Directors and in addition a commission equal to 10 per cent 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 is whether the commission payable to the managing agents under this agreement is to be ten per cent, of the profits of the assessee without deduction of the excess profits tax payable by it on its profits or after deduction.

2. The question has arisen in the course of the assessment of excess profits tax payable by the assessee. The Excess Profits Tax Officer held that the commission has to be ascertained on the profits remaining after deduction of excess profits tax. This view was upheld by the Appellate Assist