Satyanarayana Rao, J.-The question that was referred to us for our decision is: “Whether on the facts and in the circumstances of the case, the inclusion of a sum of Rs. 2,46,407 for the assessment year 1944-45 and Rs. 1,03,985 for assessment year 1945-46 representing remuneration derived by the Managing Agency of the Davangere Cotton Mills, Limited, Davangere, in the total income of the assessee family is lawful.”

The assessee is a Hindu undivided family. The only question that arises for consideration in this reference is, whether the income derived by Hanumanthappa and his son under the Managing Agency Agreement with the Davangere Cotton Mills Company, entered into on 15th March, 1937, should be included in the total income of the assessee under section 16 of the Act. Being an income which accrued in the Native State, it is exempt under section 14 of the Act from tax, but it could be taken into consideration under section 16 of the Act in computing the total income of the assessee for the purpose of determining the rate. It is from that point of view that the question becomes relevant.

The joint family was carrying on business in British India under the name and style of R. Hanuma

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