Judgement

SHAH, J.: By an agreement dated October 29, 1928 Ciba (India) Ltd.- hereinafter called the principals - appointed one Tejaji Farasram Kharawalla selling agent for the District of Ahmedabad in respect of certain kinds of dyes and dye-stuffs, and agreed to pay him commission at the rate of 121/2 per cent on sales by him of dyes and dye-stuffs of the principals. The commission was to include all charges in connection with the upkeep of offices and godown, turnover rebates and contingency expenses etc.

2. The terms relating to commission were modified by agreement dated August 20. 1935 and out of the commission agreed to be paid 71/2 per cent was to be treated as the selling commission and 5 per cent was to be treated as compensation in lieu of the contingency expenses which the selling agent had to meet, "such as commission to Dyeing Masters, agents etc.". The rights of the selling agent were assigned with the consent of the principals to the respondent Company with effect from October 27, 1947. In assessing the income of the Company for the assessment year 1949-50, the Income-tax Officer included in the taxable income Rs. 58,025/- being the difference between Rs. 1,90,538/