Judgment

GUPTA, J.:- This is an appeal by special leave from a Judgment of the Madras High Court in a reference under Section 68 (I) of the Income-tax Act, 1922. The appellant, Nonsuch Estate Limited, is a public limited company incorporated in the year 1924 under the Indian Companies Act, 1913. The appellant, referred to hereinafter as the Company derives its income from tea grown in its estate {or which it is assessed to income-tax. M/s. Harrisons and Crosfield Limited have been the managing agents of the Company from the beginning. The following question relating to the assessment year 1959-60 was referred to the High Court:

"Whether on the facts and in the circumstances of the case, the sum of Rupees 97,188/- representing the Managing Agency remuneration for the period 1-4-1956 to 30-6-1957 was deductible in the computation of the income of previous year ending on 30th June, 1958, relevent for the assessment year 1959-60."

2. The relevant facts leading to the reference are these. The managing agents of the Company were entitled to commission at the rate of 11/2 per cent on all sales of tea and other produces of the Company and a further sum of Rupees 12,000/- per annum for secreta