Judgement

RAMASWAMI, J.: This appeal is brought by certificate from the judgment of the Calcutta High Court dated 20th September, 1963 in Income-tax Reference No. 23 of 1960.

2. The appellant (hereinafter referred to as the assessee) was carrying on the business of crushing sugar cane and gur refining. M/s. Andrew Yule and Co. were acting as the managing agents of the assessee. In a letter dated 5th February, 1946 addressed to the share-holders of the assessee the managing agents referred to the alarming increase of Government interference in the affairs of the sugar industry in Bihar and the increase of wages of the workers, as well as the levy of a cess of Government and deterioration in the cane crops. In view of this state of affairs, the managing agents apprehended a loss and suggested that the company s affairs should be put on a "less discouraging basis" by accepting the offer of a lease of the company as a running concern from the Standard Refinery and Distillery Ltd. At an extraordinary general meeting of the shareholders of the assessee company held on 5th March, 1946 it was decided to authorise the directors to enter into a lease with the said Standard Refinery and Distill