JUDGMENT

TULZAPURKAR, J.:—These appeals by special leave raise a common question whether on proper construction of the agreement dated Nov. 10, 1955, entered into by the assessee with Kamala Mills Ltd., the latter was the "Manager" of the assessee within the meaning of S. 384 read with Section 2 (24) of the Companies Act, 1956 and if so whether the remuneration paid by the assessee to the latter in the two calendar years 1957 and 1958 relevant to the assessment years 1958-59 and 1959-60 cannot be allowed as business expenditure under S. 10 (2) (xv) of the Indian Income-tax Act, 1922 ?

2. The facts giving rise to the question may briefly be stated as follows : The assessee (M/s. Alagappa Textiles (Cochin) Ltd.) is a public limited company carrying on business of manufacture and sale of yarn and has its registered office at Alagappa Nagar in Kerala State. It entered into an agreement dated Nov. 10, 1955 with Kamala Mills Ltd., Coimbatore for financing and managing the assessee mills at Alagappa Nagar for a period of five years. Clause 8 of the agreement provided that Kamala Mills Ltd. shall be paid, for the services rendered by it by way of purchases, sales and management, remuneratio