( 1 ) THIS is a reference made by the Income-tax Appellate Tribunal, Madras Bench, undeer section 66 (1) of the Indian Income-tax Act, 1922, at the instance of the assessee. The question referred reads thu :

"whether the assessment of the royalties received by the assessee during the assessment years 1953-54, 1954-55, 1955-56, 1956-57 and 1957-58 at the sums of Rs. 21,271, Rs. 87,379, Rs. 1,63,180, Rs. 2,54,827 and Rs. 2,98,901, respectively, is valid?"

( 2 ) THE learned judge set out the statement of case which ran as follow : there was an agreement entered into on 16th May, 1952, copy whereof is annexed hereunto as annexure "a" and forms part of the case between Messrs. Tokyo Shibaura Electric Co. Ltd. (hereinafter referred to as the "principal company") and the Radio Electricals Manufacturing Co. Ltd. (hereinafter referred to as the "agent company") under which the latter undertook in India the manufacture of house service meters with the aid of the licences and technical information, data and experience of the principal company aforesaid on certain terms and conditions embodied therein. The following clauses therein relate to the remuneration payable to the "principal company :

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