( 1 ) THESE two references arise out of the assessment of the same assessee Messrs. Inderchand Hari ram, Gorakhpur, in respect of two different assessment years, viz. , 1940-41 and 1941-42. Since the question, that arose, was common to both the references, the Income-tax Appellate Tribunal, allahabad, made one consolidated order of reference and, by it, referred the following question to this Court for opinion:

"whether, in the circumstances of the case, the income derived by the applicant firm both as managing and Sole Agents of Messrs. Shankar Sugar Mills, Limited, Captainganj, Gorakhpur, was rightly assessed under Section 10 or whether the income is assessable under Section 7 of the indian Income-tax Act?"

( 2 ) THE facts relating to these references, as given in the statement of the case, are that the assessee is a firm registered under the Indian Partnership Act, having come into existence through a deed of partnership which mentioned that it was being constituted with a view to floating a private limited company to be called the Shankar Sugar Mills, Limited with a capital of 13 lacs out of which a sum of 12 lacs of rupees was to be subscribed by the partners according to their shares in the firm and to securing its Managing Agency. The partnership deed provided that

"the business of the partnership shall be to float and obtain the Managing Agency of the proposed Shankar Sugar Mills, Limited, and shall be carried on at Captainganj, District gorakhpur, and at such other place or places as the partners may from time to time agree upon. "

In pursuance of this deed of partnership, a private company called the Shankar Sugar Mills, limited, was actually floated and the Managing Agency of the company was obtained by the assessee firm. According to the Memorandum and Articles of Association of the Shankar Sugar mills, Limited, the assessee firm styled as Inderchand Hari Ram or their assignees or successors in business were entitled to remain and continue as Managing Agents for the period (of 31 years certain?) from the incorporation of the company. The partnership deed had further provided that"the partnership shall not be dissolved by the death of any of the partners, the deceased partners legal heir and representative shall become partner ipso facto. "

The appointment of the assessee firm as Managing Agents of the Shankar Sugar Mills, Limited, carried with it the right to receive an allowance of Rs. 1,000/- a month, a commission of 1 per cent. on all sales of the companys products and a commission varying from 5 to 10 per cent. on the profits of the company for working as such. Consequently, the assessee firm received a total sum of Rs. 34,177/6/3 for remuneration and commission in the previous year corresponding to the assessment year 1940-41 and a sum of Rs. 34,440/- in the previous year corresponding to the assessment year 1941-42. In addition, during both these years, the assessee firm worked as the sole selling agents of Messrs. Shankar Sugar Mills, Limited, and received commission on sales if sugar and income under some other heads which, after deduction of expenses, gave a net revenue of Rs. 11,847/- in the previous year corresponding to the assessment year 1940-41. In the next year, the income from this sole agency business was Rs. 13,139/ -. The total income of the assessee firm in the two years in dispute was thus Rs. 46,024/6/3 and Rs. 47,579/- respectively. The Income-tax Officer assessed this entire income of the assessee firm in each of the years as income from business under Section 10 of the Indian Income-tax Act. The contention of the assessee firm that the income received by it for working as Managing Agents as well as for working as Sole Agents of Messrs. Shankar Sugar Mills, Limited, should be treated as salary and assessed under Section 7 of the Act was rejected by the Income-tax Officer. The assessee appealed to the Appellate Assistant Commissioner of Income-tax and on dismissal of the appeal t