The payment of commission to Mr. Prabhu Dayal Agrawal was for services rendered in procurement of raw materials for the business and trade of the assessee-company, and thus cannot be described as of a capital nature.

Mehar Singh, J.

1. The assessee-company, Dalmia Dadri Cement Ltd., is a manufacturer of cement. Mr. Prabhu Dayal Agrawal had found some kankar deposits, suitable for manufacture of cement, in the former Jind State, and he made available what he had enquired into and found in this respect to Mr. Shanti Prasad Jain. In consequence, and with the assistance of Mr. Prabhu Dayal Agrawal, an agreement was entered into on April 2, 1938, between the then Ruler of the former Jind State and Mr. Shanti Prasad Jain, for the sole and exclusive right of manufacturing cement in the former Jind State by the latter and to win and work the kankar and limestone deposits in that State in the terms and conditions of that agreement. The assessee-company having been formed, Mr. Shanti Prasad Jain transferred the rights under that agreement to it by another agreement of May 4, 1938, on the same terms and conditions as the original agreement. The assessee-company then entered into the business of manufacture of cement in the former Jind State. On May 27, 1938, the assessee-company entered into an agreement, annexure "B" to the statement of the case, with Mr. Prabhu Dayal Agrawal. In the preamble of that agreement it was stated that Mr. Prabhu Dayal Agrawal, being one of the promoters of the assessee-company, had rendered considerable service in its promotion, had helped in bringing about the agreement of April 2, 1938, between the former Ruler of Jind State and Mr. Shanti Prasad Jain, and had enquired and found kankar deposits in the former Jind State, suitable for manufacture of cement. It was then said that the parties agreed that the said beneficiary (Mr. Prabhu Dayal Agrawal) will get a commission so long as agreement exists between this company and the Government of Jind State at the rate of 1% on the yearly net profits of the company derived from the cement factory at Dalmia Dadri, including all the extensions that will be carried on in the said factory from time to time. Such yearly net profits will be calculated after making all proper allowances and deductions from revenue for interest on loans and advances, repairs, and outgoings for all the usual working charges, depreciation, bounties or subsidies received from Government or from a public body, profits by way of premium on shares sold, profits on sale proceeds and forfeited shares, or profits from the sale of the whole or part of the undertaking of the company but without any deduction in respect of income-tax or super-tax, or any other tax or duty on income or revenue or for expenditure by way of interest on debentures or otherwise on capital account or on account of any sum which may be set aside in each year out of the profits for reserve or any other special fund. In the years following the date of the agreement of May 27, 1938, the income-tax department treated the annual payment under the agreement by the assessee-company to Mr. Prabhu Dayal Agrawal as revenue expenditure in the hands of the assessee-company prior to the assessment year 1955-56. This was not questioned by the revenue in those years as capital expenditure. The Income-tax Officer having found in favour of the assessee-company in this respect, it was open, in exercise of his powers of revision under Section 33B of the Income-tax Act, 1922 (XI of 1922) to the Commissioner of Income-tax if he considered that the order made by the Income-tax Officer was erroneous in so far as it was prejudicial to the interests of the revenue to pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment, but this was not done ; if that had been done, it would have been open to the assessee-company to take an appeal against such an order under Sub-section (3) of Section 33B to the Income-tax Appellate Tribunal. So the revenue did not, earlier to the assessment year 1955-56, question the allowance of the paymen