1. This reference under section 66 (1) of the Indian Income Tax act, has been made in circumstances hereinafter related.

2. The assessee, Turner, Morrison and Company Private Limited, is an Indian Company doing business as the Managing Agent of certain shipping concerns. During the assessment year 1952-53 the assessee company used to employ five Directors and during the assessment year 1953-54 one more. These persons, although designated as Directors (to be more precise either as Full directors or as Local Directors, according to their executive ranks), were, in fact, high executives of the company. They did not hold any shares in the company and had no hand in policy making. Each one of them rose by promotion from lower ranks. Their remuneration and service conditions; used to be governed by separate agreements with the assessee company. They were in no way related to the shareholders of the assessee company, who mostly belong to the wealthy English family known as "turner Family. "

During the assessment year 1952-53, the assessee company paid to one ox its Directors, of the name of M. G. Robson, a sum of Rs. 1,00,000 by way of compensation for earlier termination of his c