Contracts Cases
1. Lakshminarayan Ram Gopal and Son Ltd V. The Government of Hyderabad, AIR 1954 SC 364
FACTS:
An Agency agreement was entered into between the Mills Company and the appellants appointing the appellants it’s Agents for a period of 30 years. The appellants throughout worked only as the Agents of the Mills Company and for the Fasli years 1351 and 1352 they received their remuneration under the terms of the Agency agreement. Notice was sent to the appellants to pay the amount of tax appertaining to these chargeable accounting periods. The appellants submitted their accounts and contended that the remuneration received by them from the Mills Company was not taxable on the ground that it is was not income, profits or gains from business and was outside the pale of the Excess Profits Tax Regulation. The Excess Profits Tax Officer made an order assessing the income of the appellants for the accounting periods 1351 and 1352 Fasli at Rs. 8,957 and Rs. 83,768 respectively and assessed the tax accordingly.
ISSUES:
1. Whether under the terms of the agreement the petitioner is an employee of the Mills Company or is carrying on business? 2. Whether the remuneration received from the Mills is on account of service or is the remuneration for business?
ANALYSIS OF THE FACTS: 1. The appellants were registered as a private limited company having their registered office in Bombay and the objects for which they were incorporated were the following :
To act as agents for Governments or Authorities or for any bankers, manufactures merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business. 2. Under the Articles of Association of the Mills Company the appellants and their assigns were appointed the agents of the Company. 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. They were to have power to appoint and employ in or
FACTS:
An Agency agreement was entered into between the Mills Company and the appellants appointing the appellants it’s Agents for a period of 30 years. The appellants throughout worked only as the Agents of the Mills Company and for the Fasli years 1351 and 1352 they received their remuneration under the terms of the Agency agreement. Notice was sent to the appellants to pay the amount of tax appertaining to these chargeable accounting periods. The appellants submitted their accounts and contended that the remuneration received by them from the Mills Company was not taxable on the ground that it is was not income, profits or gains from business and was outside the pale of the Excess Profits Tax Regulation. The Excess Profits Tax Officer made an order assessing the income of the appellants for the accounting periods 1351 and 1352 Fasli at Rs. 8,957 and Rs. 83,768 respectively and assessed the tax accordingly.
ISSUES:
1. Whether under the terms of the agreement the petitioner is an employee of the Mills Company or is carrying on business? 2. Whether the remuneration received from the Mills is on account of service or is the remuneration for business?
ANALYSIS OF THE FACTS: 1. The appellants were registered as a private limited company having their registered office in Bombay and the objects for which they were incorporated were the following :
To act as agents for Governments or Authorities or for any bankers, manufactures merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business. 2. Under the Articles of Association of the Mills Company the appellants and their assigns were appointed the agents of the Company. 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. They were to have power to appoint and employ in or