Case of Other, April 01, 1954 (case Lakshminarayan Ram Gopaland Son Ltd. VS. The Government Of Hyderabad.)

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Summary


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 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.

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Extract


Case of Other, April 01, 1954 (case Lakshminarayan Ram Gopaland Son Ltd. VS. The Government Of Hyderabad.)

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.

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 ...

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