Judgment

RAMASWAMI, J.:- These appeals are brought by special leave from the judgment of the Allahabad High Court dated July 10, 1962 in Income Tax Miscellaneous Cases Nos. 255 and 256 of 1955.

2. The appellant, M/s. Juggi Lal Kamlapat, hereinafter called the assessee was a registered partnership firm having the following constitution:

Names of the partners Shares

1. Shri S. M. Bashir . . . 49 per cent

2. Sri Padampat Singhania . . 17 per cent

3. Sri Lakshmipat Singhania . 17 per cent

4. Sri Kailaspat Singhania . . 17 per cent.

Total . . 100 per cent

The share-holding of the three Singhania brothers was 51 per cent, constituting a majority of the share holding in the partnership firm. The partners of the said firm floated a company, namely, M/s. J. K. Iron and Steel Company Ltd., the constitution of which was that the three Singhania brothers and their wives had 166 shares while Sri S. M. Bashir and his wife had 42 shares. In consideration of the fact that the assessee firm promoted the company the assessee was appointed the managing agent of M/s. J. K. Iron and Steel Company Ltd. for a period of 25 years under a Managing Agency agreement dated December 15, 1938. It was provided in