Law:

Section:

Section 10(5A)(a) of the Indian Income-tax Act, 1922 [corresponding to section 28(ii)( a) of the Income-tax Act 1961]-Business income-Compensation for termination of management agency agreement-Whether compensation paid by the managed company to the managing agent is taxable in the hands of managing agents under section 10(5A)(a) despite finding of tribunal in managed company's assessment for relevant period that termination of managing agency agreement by managed company was not bona fide-Held, on facts, yes Facts The assessees were the managing agents of company which paid them, by way of compensation, two sums of Rs. 81,000 and Rs. 2,00,000 in connection with the termination of the agreement of magaging agency. Before the ITO, the assessees contended that the said amounts were not taxable in their hands as the provisions of section 10(5A)(a) of the 1922 Act were not attracted. The ITO rejected the said contention and brought the said two amounts to tax in their assessment orders for the assessment years 1957-58 and 1958-59, respectively. In pressing their claim before the AAC, the assessees relied on the earlier order of the Tribunal dated 31-1-1962 in the managed company's assessment for the assessment year 1955-56, wherein the Tribunal, relying on certain circumstances stated therein, had held that the termination of the managing agency agreement by the managed company was not bona fide and had disallowed the said amounts as deduction. The AAC, however, upheld the ITO's order. On second appeal, the Tribunal, relying on its aforementioned order in the managed company's assessment, observed that even if the payment by the managed company was proved and even if the receipt by the managing agents, i.e., the assessees, was admitted, it was neither compensation nor other payment due to or received by the assessees at or in connection with the termination of their managing agency agreement. The Tribunal, accordingly, reversed the AAC's order. On reference : Held In the instant case, there was no dispute as to the fact that the managing agency agreement with the assessees was in fact terminated by the managed company in connection with which the managed company…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492