Judgment

S. M. FAZL ALI, J. :- This is an appeal by special leave against the order of the High Court of Allahabad dated September 26. 1969 on a reference made to it by the Income-tax Appellate Tribunal, Allahabad Bench. The facts giving rise to the present appeal may be briefly summarised as follows;

The appellant assessee is a public limited company known as J. K. Cotton Manufacturers Ltd. and the matter in dispute relates to the assessment year 1944-45. The appellant entered into an agreement with the firm called Juggilal Kamlapat and employed the said firm as the Managing Agents of the Company. The agreement was executed on August 8. 1941 and the Managing Agents were to work for the Company for a period of 20 years and were to charge commission at the rate of 2 1/2 . About two years later the appellant decided to terminate the agreement executed in favour of Juggilal Kamlapat and the said Managing Agents readily accented the offer made by the appellant as a result of which a deed of release was executed by the Managing Agents Juggilal Kamlapat on September 28. 1943. Under the release the appellant agreed to pay a sum of Rs. 2,50,000/- to the outgoing Managing Agents by way of com