Law:

Section:

JUDGMENT The facts necessary for the decision of this income-tax reference may briefly be stated as under: Prabbu Dayal, working under the name and style of Ganeshi Lal Prabbu Dayal, Dadri (in the erstwhile Jind State), was instrumental in discovering the existence of kanakardeposits in Jind State and in bringing about an agreement through his good offices between one Shanti Parsad Jain and the erstwhile Jind State (forming part of the Punjab State at the time of the reference and now, after the reorganisation, forming part of Haryana State), for the acquisition of the sole and exclusive monopoly rights of exploiting these deposits and manufacturing cement in the said Jind State, vide an agreement dated 2nd of April, 1938. This agreement was to be operative for 25 years in the first instance, and, at the option of the aforesaid Shanti Parsad, was liable to be extended to 100 years. Later a public limited company, named Messrs. Dalmia Dadri Cement Limited (hereinafter referred to as the company), was incorporated and the benefits of the above-mentioned agreement were transferred to that public company. The assessee also assisted in the promotion of the aforesaid company. For the aforesaid services rendered by the assessee the company entered into an agreement on 27th of May, 1938, by which it agreed to pay to the assessee by way of commission 1 per cent, on the yearly net profits earned by the company from the said cement factory. This agreement was to last so long as the monopoly rights granted by Jind State, vide its agreement dated 2nd of April, 1938, subsisted. The assessee was paid his 1 percent, commission regularly till 1950. As no commission was paid thereafter, the assessee filed a suit against the company, and in that suit a compromise was entered into by which the assessee was paid a total amount of Rs. 15,000 as commission for the years 1951 and 1952; another Rs. 15,000 as commission for the year 1953, and Rs. 70,000 were paid by way of compensation for the termination of the agreement dated 27th of May, 1938, and this amount was received by the assessee on 11th June, 1954, and the earlier agreement was to be terminated with effect from 1st January,…

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