This is a reference under section 66(1) of the Income-tax Act, the question referred to our decision being "Whether the sum of Rs. 28, 779 representing remuneration for services rendered is a revenue receipt."

The assessee, T. Sadasivam, is an individual who has succeeded to the business of Chandra Prabha Cinetone, but the entire proceedings have gone on the footing that it was the tax liability of the Chandra Prabha Cinetone that was being adjudicated and in consequence when any reference is made to the assessee, it is the Chandra Prabha Cinetone that is intended.

Sri. T. Sadasivam and his wife Srimathi M. S. Subbulakshmi were partners of a firm called Chandra Prabha Cinetone. The firm was started in or about 1939 for the production of a tamil picture called "Sakunthala". After the production had gone on for a while and the partners had spent nearly half a lakh of rupees, they found that they could not find the entire finance necessary for completing the picture. Accordingly they entered into an agreement on 21st July, 1939, with another firm called Messrs. Royal Talkie Distributors, Madurai. The terms of this agreement were reduced to writing and this agreement had been