JUDGMENT

Rankin, C.J. - This is a reference by the Commissioner of income tax, Assam, and the question arises whether or not a certain sum amounting to Rs. 55,000 paid in April 1926 by a Mr. Trotman to the assessee is liable to income tax.

2. It appears that Mr. Trotman in 1924 was the owner of a business which he carried on under the style of John Smeal & Co. Mr. Mundy, the assessee, was engaged by Trotman as an assistant in the business. It may be that the word "assistant" is not a quite sufficient description and that Mr. Mundy might be described as manager; but Mr. Mundy began as a servant of Mr. Trotman and he had to begin with no interest save that of an employee in his master's business. It appears that by 21st May 1924 Mr. Mundy, had been serving his employer so well that for a good many years past it had been understood between them that, although there was no formal partnership, he had the position which Mr. Trotman described as "virtually that of a quarter shareholder in the business." The reason of this was that Mr. Mundy was being remunerated, it would seem by 25 per cent of the profits, and Mr. Trotman held out to Mr. Mundy that he was going to make a will, that he wish