Satish Chandra, J.@mdashVijaypat Singhania, the assessee, was, in the year 1944-45, a minor. He had been admitted to the benefits of a partnership firm, Messrs. Juggilal Kamlapat. This firm acted as managing agents of Messrs. J.K. Cotton Manufacturers Ltd. The company prematurely terminated the managing agency of the firm and paid Rs. 2,50,000 as compensation to the firm. The firm claimed this amount as a capital receipt for the loss of its income earning apparatus. This claim was negatived. It was held that the termination of the managing agency was a collusive affair based on extra-commercial reasons. The receipt of Rs. 2,50,000 was not capital in nature but revenue in its true nature and character. The case that it was compensation for the loss of managing agency was disbelieved.
2. In that assessment year, the firm Messrs. Juggilal Kamlapat, being registered, was not liable to tax. Hence, the amount of Rs. 2,50,000 was apportioned to its partners. The assessee''s share came to Rs. 66,406.
3. The assessee claimed benefit of Notification No. 878-F, dated March 21, 1922, as amended by Notification No. 8, dated March 24, 1928, issued u/s 60(1) of the Act of 1922. The Income Tax Officer repelled this claim. The findings were confirmed by the Appellate Assistant Commissioner as well as the Tribunal. At the instance of the assessee, the Tribunal has referred the following question of law for our opinion :
"On the facts and circumstances of the case, whether the assessee was entitled for rebate on the payment of Income Tax on the sum of Rs. 66,406 under the Notification No. 878-F, dated March 21, 1922, as amended by Notification No. 8 of 24th March, 1928?"
4. It is not disputed that from the very beginning of the assessment year 1944-45, the firm, Messrs. Juggilal Kamlapat, ceased to be the managing agents of Messrs. J. K. Cotton Manufacturers Ltd. The case that the firm was paid compensation of Rs. 2,50,000 for termination of the managing agency was disbelieved right up to the Supreme Court on the view that it was a collusive transaction based on extra-commercial reasons. In view of these findings, which have become final, the position is clear that the firm, Messrs. Juggilal Kamlapat, did not either in fact or in law render any service in the year in question to Messrs. J. K. Cotton Manufacturers Ltd. from whom it received the sum of Rs. 2,50,000. One of the necessary ingredients of the aforesaid notifications is that the sum received by the assessee must represent salary, bonus, commission or other remuneration "for services rendered to the person for the purposes of his business". Evidently, the firm did not receive this money on account of services rendered to the company for purposes of the company''s business. In that view, it can hardly be said that ''the assessee, who was one of the minors admitted to the benefits of the firm, Messrs. Juggilal Kamlapat, was entitled to rebate under this notification. The question referred to us is answered in the negative, in favour of the department and against the assessee. The Commissioner will be entitled to costs/which are assessed at Rs. 200 (Rupees two hundred) only.
