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PETITIONER: LAKSHMINARAYAN RAM GOPALAND SON LTD.

       Vs.

RESPONDENT: THE GOVERNMENT OF HYDERABAD.

DATE OF JUDGMENT: 01/04/1954

BENCH: BHAGWATI, NATWARLAL H. BENCH: BHAGWATI, NATWARLAL H. DAS, SUDHI RANJAN JAGANNADHADAS, B.

CITATION:  1954 AIR  364            1955 SCR  393  CITATOR INFO :  RF         1954 SC 470  (65)  R          1957 SC 846  (8,13)  RF         1957 SC 852  (31)  F          1960 SC1269  (6,7)  R          1960 SC1279  (8)  MV         1966 SC 843  (66)  R          1966 SC1514  (13)  RF         1973 SC 637  (9)  RF         1977 SC1677  (5)

ACT: Master  and Servant-Principal and Agent-Distinction  between -Hyderabad  Excess Profits Tax  Regulation-Activities  which constitute  business-Remuneration which constitutes  income, profits or gains from business.

HEADNOTE: The  difference between the relations of master and  servant and  of  principal  and  agent may be said  to  be  this:  a principal has the right to direct what work the agent has to do:  but  a master has the further right to direct  how  the work is to be done. The  positions  of  an  agent,  a  servant  and  independent contractor are distinguished as under: An  agent  is  to be distinguished on the one  hand  from  a servant, and on the other from an independent contractor.  A servant acts under the direct control and supervision of his master,  and  is bound to conform to all  reasonable  orders given  to  him  in the course of his  work;  an  independent contractor,  on the other hand, is entirely  independent  of any control or interference and merely undertakes to produce a specified result, employing his own means to produce  that result.  An agent, though bound to exercise his authority in accordance  with all lawful instructions which may be  given to him from time to time by his principal, is not subject in its  exercise  to the direct control or supervision  of  the principal.   An  agent,  as such is not 9,  servant,  but  a servant is generally for some purposes his master’s  implied agent, the extent of the agency depending upon the duties or position of the servant. Held,  that the position of the appellants in the  light  of

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the  principles  stated above and the terms  of  the  Agency Agreement  was that of the agents of the Dewan  Bahadur  Ram Gopal Mills Ltd., and they carried on the general management of  the business of the company subject to the  control  and supervision of the Directors. 394 The control and supervision of the Directors was, however, a general  control  and supervision and within the  limits  of their authority the appellants as the agents of the  company had  perfect  discretion  as to how  that  work  of  general management was to be clone both in regard to the method  and the  manner of such work and therefore the circumstances  of the  case  together  with the  of  power  of  sub-delegation reserved  under  the  Articles  of  Association  established beyond  doubt  that the appellants were the  agents  of  the company  and  not merely the servants of the  company  remu- nerated by wages or salary. Held further, that various factors along with the fixity  of tenure, the nature of remuneration and the assignability  of their rights were sufficient to prove that the activities of the  appellants as the agents of the company  constituted  a business and the remuneration which the appellants  received from the company under the terms of the Agency Agreement was income,  profits or gains from business and  the  appellants were  rightly  assessed under the  provisions  of  Hyderabad Excess Profits Tax Regulation.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 292 and 312 of 1950. Appeals  from  the Judgment and Order of the High  Court  of Judicature  at  Hyderabad (Ansari, Qamar Hasan  and  Manohar Pershad JJ.) in Cases Nos. 180-181 of 1954 F.  Ved  Vyas, (S.  K. Kapur and Ganpat Rai, with him) for  the appellant. M.   C. Setalvad, Attorney-General for India (Porus A.   Mehta, with him) for the respondent. 1954.  April 1. The Judgment of the Court was delivered by BHAGWATI  J.-These  are two appeals from  the  judgment  and decision  of  the  High Court  of  Judicature  at  Hyderabad answering certain questions referred at the instance of  the appellants  by  the  Commissioner  of  Excess  Profits  Tax, Hyderabad, and adjudging the liability of the appellants for excess profits tax in regard to the amounts recieved by them as  remuneration from the Dewan Bahadur Ramgopal Mills  Com- pany Ltd. as its Agents. The Mills Company was registered on the 14th February, 1920, at Hyderabad in the then territories of His Exalted Highness the  Nizam.   The appellants were registered  as  a  private limited company at Bombay on 395 agreement  was entered into between the Mills  Company.  and the  appellants appointing the appellants its Agents  for  a period  of 30 years on certain terms and conditions  therein recorded.   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.  A notice was issued under section 13  of the  Hyderabad Excess Profits Tax Regulation by  the  Excess Profits Tax Officer calling upon the appellants to pay  the, amount  of tax appertaining to these chargeable  account-  , ing  periods.  The appellants submitted their  accounts  and contended  that the remuneration received by them  from  the

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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.   This contention  of the appellants was negatived and on the  24th April,  1944, 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.   An  appeal was  taken by the appellants to the Deputy  Commissioner  of Excess Profits Tax who disallowed the same.  An  application made by the appellants under section 48(2) for statement  of the case to the High Court was rejected by the  Commissioner and the appellants filed a petition to the High Court  under section  48(3) to compel the Commissioner to state the  case to  the High Court.  An order was made by the High,Court  on this  petition directing the Commissioner to state the  case and  the statement of the case was submitted by the  Commis- sioner  on  the 26th February, 1946.   Four  questions  were referred by the Commissioner to the High Courts as under:- (1)  Whether the Petitioner Company is a partnership firm or a registered firm ? (2)  Whether under the terms of the agreement the petitioner is  an  employee  of the Mills Company  or  is  carrying  on business ? 396 (3)Whether  the remuneration received from the MILLs  is  on account of service or is the remuneration for business ? (4)Whether the principle of personal qualification  referred to  in  section  2,  clause  (4),  of  the  Excess   Profits Regulation is applicable to the Petitioner Company ? These  questions  were of considerable importance  and  were referred  for decision to the Full Bench of the High  Court. The  Full Bench of the High Court delivered  their  judgment the  majority deciding the questions (2) and (3) which  were the only questions considered determinative of the reference against  the  appellants.  The appellants  appealed  to  the Judicial Committee.  But before the Judicial Committee heard the  appeals  there  was  a merger  of  the  territories  of Hyderabad with India.  The appeals finally came for  hearing before  the  Supreme Court Bench at Hyderabad  on  the  12th December,  1950, when an order was passed  transferring  the appeals to this Court at Delhi.  These appeals have now come for hearing and final disposal before us. The  questions  (1)  and  (4) which  were  referred  by  the Commissioner  to the High Court at Hyderabad have  not  been seriously  pressed before us.  Whether the appellants are  a partnership  firm or a registered company the  principle  of exclusion of the income from the category of business income by reason of its depending wholly or mainly on the  personal qualifications  of the assessee would not apply because  the income  could not be said to be income from  profession  and neither a partnership firm nor a registered company as  such could be said to be possessed of any personal qualifications in the matter of the acquisition of that income. The  principal questions which were therefore argued  before the High Court at Hyderabad and before us were the questions (2) and (3) which involved the determination of the position of  the appellants whether they were servants or  agents  of the Mills Company and the determination of the character  of their remuneration whether it was wages or salary or income, profits or gains from business. 397 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:

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(1)To  act as agents for Governments or Authorities  or  for any bankers, manufacturers, merchants, shippers, Joint Stock Companies  and  others  and carry on  all  kinds  of  agency business. (2)To carry on in India and elsewhere the trade or  business of  merchants, importers exporters in all’,  their  branches etc. etc............ Under  Article  115 of the Articles of  Association  of  the Mills  Company  the  appellants  and  their  assigns   were’ appointed  the  agents  of  the  Company  upon  the   terms, -provisions and conditions set out in the Agreement referred to  in clause 6 of the Company’s Memorandum of  Association. Article  116  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. for the purposes of the transaction and managment of the affairs  and business of the Company, or otherwise  for  the purposes thereof, and from time to time to remove or suspend such  managers, agents, clerks and other employees  as  they thought  proper  with such powers and duties and  upon  such terms   as  to  duration  of  employment,  remuneration   or otherwise  as they thought fit and were also to have  powers to exercise all rights and liberties reserved and granted to them  by the said agreement referred to in clause 6  of  the Company’s Memorandum of Association including the rights and liberties contained in clause 4 of the agreement.  Article 1 18  authorised the agents to sub-delegate all or any of  the powers,  authorities  and  discretions for  the  time  being vested in them, and in particular 398 from  time  to  time to provide by  the  appointment  of  an attorney or attorneys, for the management and transaction of the  affairs  of the Company in any specified  locality,  in such manner as they thought fit. The Agency agreement which was executed in pursuance of  the appointment under Article 115, provided that the  appellants and their assigns were to be the Agents of the Company for a period  of  30 years from the date of  registration  of  the Company  and  they were to continue to act  as  such  agents until they of their own will resigned.  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., who  may be  employed  by  the appellants for or  on  behalf  of  the Company  or for carrying on and conducting the  business  of the Company.  The appellants were to be paid in addition all expenses and charges actually incurred by them in Connection with  the.  business  of the  Company  and  supervision  and management  thereof  and  the  appelants  were  entitled  to appoint  any  person or persons in Bombay to  act  as  their Agents in Bombay and any other places in connection with the business if the Company. Clauses  3 and 4 of the agency agreement are  important  and may be set out in extenso :- 3.   Subject   to  the  control  and  supervision   of   the Directors,  the said Lachminaravan Ramgopal and Son  Limited shall  have  the  general  conduct  and  management  of  the

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business and affairs of the company and shall have on behalf of  the company to acquire -by purchase lease  or  otherwise lands  tenements and other Buildings and to  erect  maintain alter  and  extend factores ware-houses,  engine  house  and other   buildings  in  Hyderabad  and’  elsewhere   in   the territories  of His Exalted Highness the Nizam and in  India -and  to  purchase, pay for, sell,  resell,  and  repurchase machinery, engines, plant, raw cotton, waste, jute, wool and 399 other fibres and produce, stores and other materials and  to manufacture  yarn  cloth and other fabrics and to  sell  the same either in the said territories as well as elsewhere  in India  and either on credit or for cash, or for  present  or future delivery, and to execute become parties to and  where necessary  to cause to be registered all deeds,  agreements, contracts,  receipts and other documents and to  insure  the property of the Company for such purposes and to such extent and  in  such  manner  as they  may  think  proper;  and  to institute, conduct, defend, compromise, refer to arbitration and abandon legal and other proceedings, claims and disputes in which the Company is concerned and to appoint and  employ discharge, re-employ or replace engineers. managers,  retain commission  dealers, muccadums, brokers, clerks,  mechanics, workmen and other officers and servants with such powers and duties  and  upon  such  terms  as  to  duration  of  office remuneration  or  otherwise as they may think fit ;  and  to draw,  accept endorse, negotiate and sell Bills of  Exchange and Hundies with or without security and to receive and give receipts for all moneys payable to or to be received by  the company  and  to  draw cheques against  the  moneys  of  the company  and generally to make all such arrangements and  do all  such  acts  and things on behalf of  the  Company,  its successors  and assignsas may be necessary or expedient  and as  are  not  specifically  reserved  to  be  done  by   the Directors. 4.The  said Lachminarayan Ramgopal & Son Ltd., shall  be  at liberty  to  deal  with the Company by way of  sale  to  the Company  of cotton all raw materials and  articles  required for  the  purpose of the Company and the purchase  from  the Company of yarn cloth and all other articles manufactured by the  Company  and otherwise, and to deal with  any  firm  in which  any  of the shareholders of  the  said  Lachminarayan Ramgopal & Son Ltd., may be directly or indirectly concerned provided  always  such  dealings are  sanctioned  passed  or ratified  by the Board of Directors either before  or  after such dealings. Clause 8 provided that two of the members for the time being of the appellants were at the option of the 400 appellants to be the ex-officio Directors of the Company and clause  9 empowered the appellants to assign  the  agreement and  the rights of the appellants thereunder subject to  the approval  and sanction of the Board to any person,  firm  or Company having authority by its constitution to become bound by the obligations undertaken by the appeallants. No materials other than these ’were placed by the appellants either  before the Income-tax Authorities or the High  Court and the questions that arise before us have to be determined only  on these materials.  If on the construction  of  these documents  we arrive at the conclusion that the position  of the  appellants was not that of servants but the  agents  of the Company the further question would have to be determined whether  the  activities of the appellants amounted  to  the carrying  on of business.  If they were not the servants  of the  Company,  the remuneration which  they  received  would

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certainly not be wages or salary but if they were agents  of the  Company the question would still survive whether  their activities amounted to the carrying on of business in  which case  only  the remuneration which they  received  from  the Company would be income, profits or gains from business. The  distinction  between  a servant and an  agent  is  thus indicated in Powell’s Law of Agency, at page 16 : -- (a)Generally  a master can tell his servant what to  do  and how to do it. (b)  Generally  a  principal cannot tell his  agent  how  to carryout his instructions. (c)  A servant is under more complete control than an agent, and also at page 20:- (a)Generally,  a servant is a person who not  only  receives instructions from his master but is subject to his  master’s right  to control the manner in which -he carries out  those infructions.  An agent receives his principal’s instructions but  is  generally  free to  carry  out  those  instructions according to his own discretion                 401   (B)   Generally, a servant, qua servant, has no  authority to  make -contracts on behalf of his master’ Generally,  the purpose  of employing an agent is to authorise him  to  make contracts on behalf of his principal.     (c)   Generally,  an  agent is paid by  commission  upon effecting  the  result which he has been instructed  by  his principal to achieve.  Generally, a servant is paid by wages or salary.       The statement of the law contained in Halsbury’s  Laws of  England-Hailsham Edition-Volume 22, page 113,  paragraph 192 may be referred to in this connection :-       "The  difference between the relations of  master  and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do:  but  a master has the further right to direct  how  the work is to be done."      The position is further clarified in Halsbury’s Laws of England-Hailsham  Edition-,Volume 1, at page.  193,  article 345  where  the  positions  of an agent,  a  a  servant  and independent contractor are thus distinguished : -      " An agent is to be distinguished on the, one hand from a servant, and on the other from an independent  contractor. A  servant acts under the direct control and supervision  of his master, and is bound to conform to all reasonable orders given  him  in  the  course  of  his  work;  an  independent contractor,  on the other hand, is entirely  independent  of any  control  or  interference,  and  merely  undertakes  to produce  a  specified resulted employing his  own  means  to produce that result.  An ament, though bound to exercise his authority  in accordance with all lawful instructiOns  which may  be given to him from time to time by his principal,  is not  subject  in  its  exercise to  the  direct  control  or supervision  of the principal.  An -agent, as such is not  a servant,  but a servant is generally for some  purposes  his master’s  implied agent, the extent of the agency  depending upon the duties or position of the servant’ "Considering the position  of  the  appellants  in the  light  of  the  above principles it is no doubt true that the 52 402 appellants  were  to act as the agents of  the  Company  and carry  on  the  general management of the  business  of  the Company  subject  to  the control  and  supervision  of  the Directors.  That does not however mean that they acted under the  direct  control  and supervision of  the  Directors  in

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regard to the manner or method of their work.  The Directors were  entitled  to lay down the general policy and  also  to give  such directions in regard to the management as may  be considered necessary.  But the day to day management of  the business of the Company as detailed in Article I 1 6 of  the Articles of Association and clause 3 of the Agency Agreement above  set out was within the discretion of  the  appellants and apart from directing what work the appellants had to  do as the agents of the Company the Directors had not conferred upon  them the further right to direct how that work of  the general  management  was  to  be  done.   The  control   and supervision  of  the  directors was a  general  control  and supervision  and  within the limits of their  authority  the appellants  as  the  agents  of  the  Company  had   perfect discretion as to how that work of general management was  to be done both in regard to the method and the manner of  such work.   The appellants for instance had perfect latitude  to enter into agreements and contracts for such purpose and  to such extent and in such manner as they thought proper.  They had  the  power to appoint, employ, discharge,  reemploy  or replace  the officers and servants of the Company with  such powers  and  duties and upon such terms as  to  duration  of office remuneration or otherwise as they thought fit.   They had  also the power generally to make all such  arrangements and to do all such things and acts on behalf of the Company, as  might  be  necessary  or  expedient  and  as  were   not specifically  reserved to be done by the  Directors.   These powers did not spell a direct control and supervision of the Directors  as of a master over his servant  but  constituted the  appellants  the  agents  of the  Company  who  were  to exercise   their  authority  subject  to  the  control   and supervision  of the Directors but were not subject  in  such exercise  to  the  direct  control  or  supervision  of  the principals.   The  liberty  given to  the  appellants  under clause 4 of the Agency 403 Agreement  to  deal  with the Company by  way  of  sale  and purchase of commodities therein mentioned also did not spell a  relation as between master and servant but empowered  the appellants  to deal with the Company as Principals in  spite of  the  fact that under clause 8 of the  Agreement  two  of their  members for the time being were to be the  ex-officio Directors of the Company.  The power to assign the Agreement and the rights of the appellants thereunder reserved to them under clause 9 of the Agency Agreement though subject to the approval and sanction of the Board was hardly a power  which could  be vested in a servant.  There was further the  right to continue in employment. as the agents, of the Company for a  period  of  30 years from the date  of  the  registration thereof  and  thereafter until the appellants of  their  own will  resigned, which also would be hardly  consistent  with the  employment  of the appellants as mere servants  of  the Company.  The remuneration by way of commission of 2-1/2 per cent.  of the amount of sale proceeds of the produce of  the Company  savoured  more  of  the  remuneration  given  by  a principal  to his agent in the carrying out of  the  general management  of the business of the principal@ than of  wages or salary which would not normally. be on such a basis.  All these   circumstances  together  with  the  power  of   sub- delegation  reserved under Article 118 in our opinion go  to establish that the appellants were the agents of the Company and  not merely the servants of the Company  remunerated  by wages or salary.     Even  though  the  position of the  appellants  qua  the Company was that of agents and not servants as stated  above

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it remains to be determined whether the work which they  did under the Agency Agreement amounted to carrying on  business so  as  to constitute the remuneration which  they  received thereunder  income,  profits or gains  from  business.   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.  The activities in order  to constitute a business need not necessarily be concerned with several. individuals or concerns.  They would constitute 404 business  in  spite of their being restricted  to  only  one individual or concern.  What is relevant to consider is what is the nature and scope of these activities though either by chance  or  design  these might be restricted  to  only  one individual or concern.  It is the nature and scope of  these activities  and not the extent of the operations  which  are relevant for this purpose.      The activities of the appellants certainly did not come within  the inclusive definition of business which is  given in section 2 clause 4 of the Excess Profits Tax  Regulation, Hyderabad.  Business is there defined to include any  trade, commerce or manufacture or any adventure in the ’nature of a trade, commerce or manufacture or any profession or vocation but not to include a profession carried on by an  individual or  by  individuals  in partnership if the  profits  of  the profession depend wholly or mainly on his or their  personal qualifications  unless  such profession consists  wholly  or mainly in the making of contracts on behalf of other persons or giving to other persons of advice of a commercial  nature in connection with the making of contracts.  The work  which the  appellants did under the terms of the Agency  Agreement constituted  neither trade, commerce or manufacture  or  any adventure:  in the nature of trade, commerce or  manufacture nor was it a profession or vocation. ,     The  activities  which constitute carrying  on  business need not necessarily consist of activities by way of  trade, commerce  or manufacture or activities in the exercise of  a profession or vocation.  They may even consist of  rendering services  to  others which services may be of  a  variegated character.   The considerations which apply in the case  -of individuals  in  the  matter  of  determining  whether   the activities constitute a business within the meaning of  the, inclusive definition thereof set out above may not apply  in the  case  of  incorporated  companies.   Even  though   the activities  if  carried on by individuals  might  constitute business  in  that  sense they  might  not  constitute  such business  when  carried  on by  incorporated  companies  and resort  must be had to the general position in law in  order to  determine whether the incorporated company was  carrying on business ad 405 as to constitute the income earned by it income’ profits  or gains from business.  Reference may be made in this  context to   William   Esplen,  Son  and   Swainston,   Limited   v. Commissioners of Inland Revenue (1).  In that case a private limited company was incorporated for carrying on business as naval  architects  and  consulting  engineers.:  Before  the formation of the company, a partnership had existed for many year between three persons who, on incorporation, became the sole  shareholders  and  directors  of  the  company.    The partnership   had  carried  on  the  profession.  of   naval architects and consulting engineers and the work done by the company  was identical in character with that formerly  done by the partnership which it succeeded.  The work done by the

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company  was  identical in all respects with the work  of  a professional  naval architect and consulting  engineer,  and was  performed by the said three shareholders and  directors of  the  company personally.  A question arose  whether  the company  was carrying on a profession within the meaning  of section 39 paragraph C of the Finance (No. 2) Act, 1915.  It was  contended  that  it carried on a  profession  of  naval architects  and  consulting engineers  because  the  members composing  it were three naval architects.  That  contention was however negatived and it was held that even though  what was  to be looked at was the character of the work  done  by the  company, it was not carrying on the profession  of  the naval architects within the meaning of the section,  because for that purpose it was of the essence of a profession  that the  profits  should be dependent mainly upon  the  personal qualifications  of the person by whom it was carried on  and that  could  only bean individual.  A company such  as  that could  only do a naval architect’s work by sending  a  naval architect to its customers to do what they wanted to be done and  it  was  held that the company was not  carrying  on  a profession  but was carrying on a trade or business  in  the ordinary sense of the term.     When  a partnership firm comes into existence it can  be predicated  of  it that it carries on  a  business,  because partnership   according   to  section  4   of   the   Indian Partner.ship Act is the relation between persons who have (1)  (1919] 2 K.B. 731. 406 agreed to share the profits of a business -carried on by all or  any of then acting for all. (See Inderchand Hari Ram  V. COMMissioner  of  Income-tax,  U.P & C.P.(1)).  But  when  a company  is  incorporated it may not necessarily  come  into existence  for  the  purpose  of  carrying  on  a  business. 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.............................. form an  incorporated company, and the lawful purpose  for  which the  persons become associated might not necessarily be  the carrying on of business.  When a company is incorporated for carrying  out  certain activities it would  be  relevant  to enquire  what  are  the  objects  for  which  it  has   been incorporated.   As was observed by Lord Sterndale, M.R.,  in Commissioners of Inland Revenuev.  The   Korean    Syndicate Limited(2) :    " If you once get the individual and the company spending exactly on the same basis, then there would be no difference between them at all.  But the fact that the limited  company comes  into existence in a different way is a matter  to  be considered.   An  individual comes into existence  for  many purposes, or per. haps sometimes for none, whereas a limited company  comes into existence for some  particular  purpose, and if it comes into existence for the particular purpose of concessions  and  turning them to account, then  that  is  a matter  to  be considered when you come  to  decide  whether doing that is carrying on a business or not."      Justice  Rowlatt  followed  the  above  view  of   Lord Sterndale,  M.R.,  in  Commissioners of  Inland  Revenue  v. Birmingham  Theatre Royal Estate Co., Limited(1),  and  held that  " when you are considering whether a certain  form  of enterprise is carrying on business or not, it is material to look and see whether it is a company that it; doing it." The objects  of  an  incorporated company as laid  down  in  the Memorandum of Association are

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(1)  [1952] I.T.R. 108. (2)  (1921) 12 Tax Cas. 181 at P. 202. (3)  (1923) I2 Tax Cas. 580 at P. 584. 407 certainly  not  conclusive  of  the  question  whether   the activities of the company amount to carrying on of business. (See  Indian  Law  Reports 55 Calcutta 1059  and  (1951]  19 I.T.R.  571).   But  they are relevant for  the  purpose  of determining the nature and scope of such activities.      The  objects of the appellants in this case inter  alia were to act as agents for Governments or Authorities or  for any bankers, manufacturers, merchants, shippers, Joint Stock Companies  and  others  and carry on  all  kinds  of  agency business.   This  object standing by itself  would  comprise within  its  ambit the activities of the appellants  as  the agents of the Company and constitute the work which they did by way of general management of the business of the  company an  agency  business.   The words " carry on  all  kinds  of agency  business  " occurring at the end of  the  object  as therein  set  out  were capable of  including  within  their general  description the work which the appellants would  do as agents for Governments or Authorities or for any bankers, manufacturers,  merchants,  shippers  and-others  when  they acted  as  agents of the Company  which  were  manufacturers inter - alia of cotton piece goods they would be carrying on agency  business within the meaning of this  object.   Apart however from this there is the further fact that there was a continuity of operations which constituted the activities of the  appellants in the general management of the  Company  a business.  The whole work of management which the appellants did  for the Company within the powers conferred  upon  them under Article 116 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 appellants were also entitled though with  the sanction  or ratification by the Board of  Directors  either before or after the dealings to enter into dealings with the Company   by   way  of  sales  and  purchases   of   various commodities.   There was nothing in the Agency Agreement  to prevent  the appellants from acting as the agents  of  other manufacturers,  Joint Stock Companies etc., and  the  appel- lants could have as well acted as the agents of other 408 concerns besides the Company.  All these factors taken, into consideration alongwith the fixity of tenure, the nature  of remuneration  and  the assignability of  their  rights,  are sufficient to enable us to ’come to the conclusion that  the activities  of the appellants as the agents of  the  Company constituted  a  business  and  the  remuneration  which  the appellants received from the Company under the terms of  the Agency Agreement was income, profits or gain from business.     The  appellants  were  therefore  rightly  assessed  for excess  profits tax and these appeals must  stand  dismissed with costs.                                    Appeal dismissed.