The first schedule to the Companies Act which contained the regulations by which unless excluded the affairs of the Company were to be governed provided under Regulation the preparation once at least every year of the profit and loss account for the period and under the Regulation for the balance sheet to be made out in every year and laid before the Company in general meeting.
The statement of the case was accordingly submitted by the Tribunal on the 12th January,and the same question as above was referred to the High Court. In 'the meantime Inman v. The basic conception is that he must have acquired a right to receive the income.
The sale was effected on the 10th April,with interest rights. The appellants throughout worked only as the agents of the Mills Company and for the Fasli years and they received their remuneration under the terms of the agency agreement.
Ordinarily in the case of business or trading concerns accounts of profits are not made except at stated intervals usually separated by a year. According to section 5 of the Indian Companies Act any seven or more persons or, where the company to be formed will be a private company, any two or more persons associated for any lawful purpose may by subscribing their names to a memorandum of association That does not however mean that they acted under the direct control and supervision of the Directors in regard to the manner or method of their work.
The Managing Agents were to be paid 10 per cent. Inspector of Taxes v. Even the working of the Company from month to month could not be taken as a reliable guide for this purpose. The appeals finally came, for hearing before the Supreme Court Bench at Hyderabad on the 12th December,when an order was passed transferring the appeals to this Court at Delhi.
Under clause 1 of that Agreement the Sassoons and their assigns were appointed the Agents of the Company for a period of 30 years from the date of the registration thereof and thereafter until they resigned or were removed from office by a special resolution of the Company. On assignment, the transferee became the Managing Agent as if its name had been inserted in the Managing Agency Agreement from the beginning.
As was observed by Lord Sterndale, M. The accrual of income to an asseseee does not mean the actual receipt of the same by him and it may be received later on. The whole work of management which the appellants did for the company within the powers conferred upon them under Article of the articles of association and clause 3 of the agency agreement consisted of numerous and continuous operations and comprised of various services which were rendered by the appellants as the agents of the company.
The remuneration of the appellants as such Agents was to be a commission of per cent on the amount of sale proceeds of all yarn cloth and other produce of the Company including cotton grown which commission was to be exclusive of any remuneration or wages payable to the bankers, Solicitors engineers, etc.
Sassoon United Mills Ltd. The profit and loss of the Company was then ascertained and a commission of 10 per cent. We see nothing in the terms of the Managing Agency Agreement which would compel or induce us to hold that there must as a matter of necessity be inferred therefrom a right to receive remuneration or commission for a broken period.
The House of Lords held that on the true construction of the Agreements, the commissions in question were earned by the assessee in the year in which the policies were underwritten, and must be brought into account accordingly and confirmed the decision of the Court of Appeal.
Article provided that the general management of the business of the Company subject to the control and supervision of the Directors, was to be in the hands of the Agents of the Company, who were to have the power and authority on behalf of the Company, subject to such control and supervision, to enter into all contracts and to do all other things usual, necessary and desirable in the management of the, affairs of the Company or in carrying out its objects and were to have power to appoint and employ in, or.
It would be therefore reasonable to assume that the profit or loss as the case may be should be determined at the end of every year so that on such calculation of net profits the Managing Agents may be paid their remuneration or commission at the percentage stipulated in the Managing Agency Agreement and the shareholders also be paid dividends out of the net profits of the Company.
If so, I should have thought that it was not arguable that that commission did not accrue for income-tax- purposes in that same year though it was not ascertainable until later.
The stipulation for the Company executing in favour of the new or the substituted Managing Agents an Agreement appointing them the Agents of the Company for the then residue of the term outstanding under the Agreement was merely consequential upon the earlier provision therein contained which stated in so many terms that the Company was bound to recognise such new or substituted Managing Agents in like manner as if their names had appeared in the mid Agreement in lieu of the partners of E.
The contention which was urged before us that the appellants only worked as the agents of the Mills Company and no others and therefore what they did did not constitute a business does not avail the appellants.
Until and unless the accounting year of the Company had gone by and the Managing Agents had served the Company as their Agents for the full period no part of the Managing Agency commission which was payable per year in the manner aforesaid could become due to them and the performance of the service, for the year was a condition precedent to the Managing Agents being entitled to any part of the remuneration, or commission for the accounting year of the- Company.
Secretary of State for India 2: The appellants were registered as a private limited company at Bombay on agreement was entered into between the Mills Company.Sassoon and Company, Ltd. now in voluntary liquidation (hereinafter referred to as the Sassoonal had the Managing Agency of three Mills (1) F.D.
Sassoon United Mills Ltd. (2) Elphinstone Spinning and We having Mills Company, Ltd., and (3) The Apollo Mills Ltd. Lakshminarayan Ram Gopaland Son Ltd. Vs. The Government of Hyderabad  INSC 35 (1 April ) 2.
Hem Singh & ANR Vs. Harnam Singh & ANR  INSC 36 (1 April ) 3. Gopal Singh & Ors Vs. Ujagar Singh & Ors  INSC 37 (2 April ) 4. M. K. Gopalan & ANR Vs. Head Note / Extract: Whether under the terms of the agreement the petitioner is an employee of the Mills Company or is carrying on business?
Whether the remuneration received from the Mills is on account of service or is the remuneration for business? Appeals from the Judgment and Order of the High Court of Judicature at Hyderabad (Ansari, Qamar Hasan and Manohar Pershad JJ.) in Cases Nos.
of F. Ved Vyas, (S. K. Kapur and Ganpat Rai, with him) for the appellant. Lakshminarayan Ram Gopal And Son Ltd vs. Government Of Hyderabad, Through Commissioner, Excess Profits Tax In Lakshminarayan Ram Gopal and Son, Ltd v.
Contains public sector information licensed under the Open Government Licence v Legend. Agency under Contracts.
Agency under Contracts. On April 4, By subhashini The Supreme Court has clearly underlined the distinctions between an agent and a servant in the case Lakshminarayan Ram Gopal & Sons v. Hyderabad Government.
Foreman v Great Western Rly Co, () 38 LTDownload