SRINIVASACHARI, J. : -

The following question has been referred to us by the Income-tax Appellate Tribunal, Madras Bench :

"Whether on the facts and in the circumstances of the case the sum of Rs. 40,000/- received from M/s. Chisty and Co., under the compromise dated 22-12-1943 is assessable to tax? The facts which led to the reference being made by the Appellate Tribunal may be briefly stated : The assessee in this case is a business-man carrying on business in the manufacture and sale of oil expellers and was the sole distributor for a certain type of oil expeller manufactured by Chisty and Co., Lahore, for the whole of India. By an agreement dated 15-2-1938, the assessee was appointed as the sole distributor. Under the terms of the agreement, the principals were not to deal directly or indirectly with any party. The agent agreed to purchase four expellers every month. Under the terms of the agreement this agency was to be in force for a period of six years certain, and the same was to continue automatically unless six months notice was given for termination by either party.

2. According to the assessee, the principals at Lahore stopped supplying the expellers as contract