SOUTHERN AGENCIES (PRIVATE) LTD. vs COMMISSIONER OF INCOME-TAX, — 1971 PTD 291

Citation: 1971 PTD 291

Court: Madras High Court

Year: 1970

Decision Date: 1970-12-31

Parties: SOUTHERN AGENCIES (PRIVATE) LTD. vs COMMISSIONER OF INCOME-TAX, JUDGMENT

Headnotes

Case cited as 1971 PTD 291

Judgment Text

Court Name: Madras High Court Judge(s): K. Veeraswa mi, Ramaprasada Rao Title:SOUTHERN AGENCIES (PRIVATE) LTD. vs COMMISSIONER OF INCOME-TAX, JUDGMENT Reported As: 1971 PTD 291 Result: Question answered Judgment JUDGMENT VEERASWAMI, J.-Loyal Textile Mills Limited, an incorporated limited liability company, had a subscribed capital consisting of 15,000 preference shares, 63,142 ordinary shares and 40,000 deferred shares. Each share was of the face value of Rs. 5. The deferred shares would be entitled to dividend only after payment of the prescribed rate of dividend to preference shares. On April 9, 1946, the assessee, which was also a company incorporated in February 1946, became the managing agents of Loyal Textile Mills under an agreement for the purpose entered into on April 17, 1946. During the year ended April 30, 1947, the assessee acquired 320 ordinary shares and 250 preference shares of Loyal Textile Mills. On October 10, 1947, the assessee made a further acquisition of 39,000 deferred shares for a total consideration of Rs. 39,000. In 1954, the assessee agreed to make over its managing agency to Karumuthu Thiagaraja Chettiar in terms of a letter dated September 16, 1954, addressed by A. V. Thomas, a director of the assessee-company. The terms included that Thiagaraja Chettiar should take over the deferred shares at Rs. 5 per share and also pay the assessee a further sum of Rs. One lakh as compensation for loss of future remuneration to the assessee as managing…

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