J.L.KAPUR, J.

(1) THIS judgment will dispose of two appeals, C. A. No. 145/58 and C. A. 323/57. They arise out of the same transaction i.e. Managing Agency Agreement and the result of C. A. No. 323/57 is dependent upon the judgment in C. A. 145158 and we propose to deal with the latter appeal which was argued before us and the former for reasons to be stated later was not pressed. The appellant in C. A. 145/58 is the Commissioner of Income-tax, Bombay and the, respondent is the assessee, a registered firm, which on 8/03/1941, was appointed the Managing Agents of Shri Ambica Mills Limited (hereinafter termed the Managed Company) the appellant in C. A. 323/57. The duration of the Managing Agency period was 20 years. By clause (2) of the Managing Agency Agreement it was provided:- ` (2)(a) The Company shall pay each year to the said Firm either the commission of 5 (five) per cent.on the total sale proceeds of yarn, and of all cloth, manufactured from cotton, silk, jute, wool waste and other fibres and sold by the company, or a commission of three pies per pound avoirdupois on the sale, whichever the said Firm choose to take, and also a commission of 10 (ten) per ce