Summarize the following court judgment. Appeals Nos. 344 346 of 1960. Appeals by special leave from the judgment and order dated September 8. 1958	 of the Madhya Pradesh High Court (Indore Bench)	 Indore	 in Civil Second Appeals Nos. 11.0 1	12 of	 1952. section T.Desai and J. B. Dadachanjifor the appellant. B. Sen	J. Bhave and 1. N. Shroff	for the respondent. July 17. The Judgment of the Court was delivered by HIDAYATULLAH	 J. These three consolidated appeals by special leave are against a common judgment and order of the High Court of Madhya Pradesh	 dated September 8	 1958	 in three second appeals filed under R. 13 of the Indore Industrial Tax Rules	 1927 of the former Holkar State	 which were in force before the State became part of Madhya Bharat State. They concern three assessments relating to the assessment years	 1941	1942 and 1943 respectively. These second appeals were originally filed in the Madhya Bharat High Court as early as 1952 ; but the records of the appeals 'were destroyed by fire and had to be reconstructed. By the time the appeals were ready	 Madhya Bharat had merged in the new state of Madhya Pradesh	 and the appeals were accordingly heard by a Divisional Bench of that High Court. The appellant is a Textile Mill and a public Joint Stock Company called the Nandlal Bhandari Mills	 Ltd. The appellant had appointed a" firm	 Messrs Nandlal Bhandari and Sons as agents	 secretaries and treasurers of the Mills	 and under cl. (6) of the agreement of agency	 it agreed to pay to the agents an office allowance	 commission on the Company 's net profits and commission on the sale proceeds. of sales of yam	 cloth	 etc. The 861 remuneration of the agents for the three accounting years was as follows : ___________________________________________________________ Remuneration As per Accounting Years	 agree ment. 1941 1912 1943 Rs. Rs. Rs. __________________________________________________________ Clause 6 1500 18	000 18	00018	000 (a) Fixed P.M. for the for the monthly allow year. ance as office allowance. (b) Commission @ 16% 2	68	335 6	15	946 10	52	939 on the Com net on painy 's Net profits Profits. (c) Commission @ 1 9 0 1	10	156 1	10156 1	64	751 2	71	672 on the sale Per Cent	 proceeds of on sales sales of yarn	 cloth etc. ___________________________________________________________ In computing the tax	 the Mills claimed to deduct under R. 3(2)(ix) of the Rules the above amounts paid as remuneration. The Rule reads : "(ix) any expenditure (not being in the nature of capital) incurred solely for the purposes of earning such profits or gains." The Assessing Officer accepted the appellant 's claim for deduction but only as. to a part. We are not required in these appeals to consider the correctness of the quantum of the deduction in view of what transpired later. The Assessing Officer also disallowed certain other claims made by the appellant	 which again need 'not be mentioned. The appellant then. appealed to the Appellate Authority	 and on December 31	 1951 the Appellate Authority	 while accepting some of 862 the appellant 's other contentions upheld the order refusing to deduct the agent	s commission on profits under R. 3(2)(ix). Three second appeals were preferred in the Madhya Bharat High Court under R. 13 of the amended Rules. They were dismissed by the High Court of Madhya Pradesh	 and hence the present appeals. The Indore Industrial Tax Rules were first promulgated in 1926 by a Cabinet Resolution (No. 373 dated March 22	 1926). In 1927	 by	 Cabinet Resolution No. 1991 dated November 23 1927	 the Rules were modified	 and the new Rules	 were made applicable retrospectively from May 1	 1926. These Rules were framed for the levy of the tax and for ascertainment and determination of the income of cotton mills. The taxcalled the "Industrial Tax" was leviable under R. 3	 which imposed the charge. It says that the Industrial Tax shall be payable by an assessee in respect of the profits or gains of any Cotton Mill industry carried on by him in the Holkar State. Sub r. (2) of R. 3 provides that such profits or gains are to be computed after making allowances	 inter alia	 for any expenditure incurred solely for the purpose of earning such profits or gains	 R. 6	 which is a part of the Rule imposing a charge	 lays down the rates which are : (a) on all incomes up to Rs. 50	000	 at 1 1/2 annas per rupee	 and (b) above	 at 2 1/2 annas per rupee. The short question thus was whether in computing the profits and gains of the appellant	 the remuneration paid to the agents was deductible under R. 3 (2) (ix). It is necessary At this stage to see the legislative machinery existing in the Holkar State in 1927 and onwards. On February 27	 1926	 His Highness Maharaja Tukoji Rao III abdicated	 and	 his son	 H.H. Maharaja Yeshwant Rao Holkar	 became the Ruler	 whose installation ceremony ' was performed on March 11	 1926. A Regency Council was appointed under the orders of the 863 Government of India for the administration ' of the State during the minority of the Maharaja. This Regency Council	 which was called the Cabinet	 was entrusted with the administration of the State according to existing rules and practice	 under the supervision and with the advice of the Agent to the Governor General in Central India. Prime Minister of the State was the Chairman. H. H. Maharaja Yeshwant Rao Holkar attained majority on September 6	 1929 and resumed sovereign powers on May 9	 1930. It was during the minority of the Ruler that the Cabinet had promulgated the amended Rules of 1927. In 1931	 the decision of the Privy Council in the well known case of Pondicherry Railway Co.	 Ltd. vs Commissioner oF Income tax (1) was rendered. In that case	 a Railway Company had agreed to make over to the French Colonial Government half of the Company 's net profits in consideration of a 99 year concession. This was sought to be deducted by the Company from its assessable profits as an expenditure incurred solely for the purpose of earning such profits. The Privy Council disallowed the deduction. Lord Macmillan observed as follows : "A payment out of profits and conditional on profits being earned cannot accurately be described as a payment made to earn profits. It assumes that profits have first come into existence. But profits on their coming into existence attract tax at that point and the revenue is not concerned with the subsequent application of the profits. " It seems that	 as a result of this decision	 a notification was issued in August	 1931	 and another on February 2/3	 1932 by the Commerce. and Industry Department of the Holkar State. The latter notification reads as follows (1) (1931) L.R. 38 I.A. 239. 864 "Commerce and Industry Department Notification. Notification No. 1 dated the 2nd/3rd Feb. 19 32. In continuation of this office Notification No. 4733 dated the 6th December	 1927 (Vide Issue No. 11 dated the 12th December	 1927	 of the Holkar Sirkar Gazette) embodying modified rules for the levy of the Industrial Tax the Cabinet	in their Resolution No. 1072 dated the 25th August	 1931	 have ordered that the Agents ' Commission on 'Profits ' should not be allowed to be deducted from the assessable profits. " It is	 to be noticed that this notification refers to the earlier notification No. 4733 of December 6	 1927	 under which were published the amended Industrial Tax Rules	 1927	 and to the notification of August 1931. The latter has not been produced before us. This notification led to representations by the persons affected by it. The Maharaja of Holkar thereupon referred the matter for the opinion of the	 Full Bench of the High Court of the State. It appears that the opinion of the High Court was in favour of disallowing such deductions. On July 14	 1933	 another notification (No. 13) was issued which reads as follows : "In continuation of this office Notification No. 1 dated 3rd February		 1932	 it is hereby published for the information of the mills and factories concerned that on submission of the Prime Minister 's (Legal Department) report No. 25 dated 11th May	 1933	 His Highness the Maharaja is please to order (vide Huzur Shri Shankar	 Order No. 173 dated 29th June	1933) that the opinion of the Full Bench of the High Court being that the Managing Agent 's Commission an profit 's is 865 not an item of expenditure incurred solely for the purpose of earning the said profit within the meaning of Rule 3(2)(ix) of the said Industrial Tax Rules and this being. also the view of the Cabinet as expressed in their resolution No. 1072 dated 28th August	 1931	 the aforesaid Cabinet Resolution be given effect to and the industrial tax due on the amount of the managing agent 's commission on profits be recovered with effect from the date of the said Cabinet Resolution. " This notification	 it is contended before this Court had not the force of law and was not enforceable against the appellants	 who claim that they are entitled to show that the remuneration paid to the agents was deductible from the profits of the Mills before. computing the Industrial Tax. In this connection	 the appellants wish to use the later decisions of the House of Lords in The Union Cold &wage Co.	 Ltd. vs Adamson(1) and of the Privy Council in The Indian Radio and Cable Communication Co.	 Ltd. vs Commissioner of I Income tax (2)	 in which the decision in the Pondicherry Railway Company case (3) was explained. In the case before the Privy Council	 Lord Maugham observed: "It is not universally true to say that a	 payment the making of which is conditional on profits being earned cannot properly be described as an expenditure incurred for the purpose of earning such profits. The typical exception is that of a payment to a	 director or a manager of a commission on the profits of a company '. If a company having made; an apparent net profit	 of pound 10	000 has then to pay pound 1	000 to directors	 or managers as the contractual recompense for their service during the year	 it: is plain that the real net profit is only pound 9	000. " (1) (2) (3) (1931) L.R. 58 (1) A. 239. 866 Lord Macmillan in the former case observed that the Pondicherry Railway Company case (1) must be read in the context of the facts of that case	 and the obligation was first to find out the net profits of the company and then to divide them. These two sets of cases proceed upon different principles. If the agreement is to share the profits the expenditure cannot properly be treated as one incurred solely for the purpose of earning such profits; but if a slice of the profits is;to be paid to persons as remuneration to help in the earning of the profits	 the deduction can be claimed. All this would of course be pertinent to consider	 if there was no legislative enactment on the subject. If the matter was not one concluded by law	 then there would be room for judicial interpretation of the Rule. The rival claims in these appeals are thus confined to the legislative force of the notifications issued in 1931	 1932 and 1933 respectively	. The appellant 's contention is that the notifications were not an act of legislation but an interpretation by the Sovereign. Mr. Desai concedes that if they be regarded as legislation	 then the later decisions of the Privy Council and some of this Court cannot be called in aid	 because where the law itself speaks with clarity	 judicial interpretation is out of place. He contends	 how ever that the two notifications were not framed as rules and were not expressly stated to be amendments of the rules then existing. He points out that after the first notification which was nothing more than an administrative direction to the assessing officers to include in the profits the remuneration of the agents	 the opinion of the High Court was obtained	 and the second notification merely pointed out that the earlier notification was to be given effect to	 and did no more than add a second administrative direction. On the other side	 it is contended that the Cabinet could make laws as often as it pleased and that (1) (1931) L. R. 58 I. A. 239. 867 the notifications must be read either as independent rules or as a legislative explanation of R. 3 (2) (ix). In so far as the legislative supremacy of the Cabinet was concerned	 no question was raised before us. When the Indore Industrial Tax Rules	 1926 were framed	 they came into existence by virtue of a Cabinet Resolution of that year. When they were modified	 they were superseded by yet another Cabinet Resolution of the year 1927	 which promulgated the new Rules with retrospective effect from May 1926. The source of the Rules 'was thus a Resolution of the Cabinet on both the occasions	 and it is not denied that the Rules thus framed had legislative sanction and were unquestionable. When the Cabinet promulgated its notifications in 1931	 1932 and 1933	 it followed the same procedure	 and it stated that the notification of 1932 was " 'in continuation of this office Notification No. 4733 dated December 6	 1927. " This has reference to that notification under which the Indore Industrial Tax Rules	 1927 were orginally published. From this	 it follows that new Rules were framed by a resolution of the Cabinet and were promulgated by a notification in the Gazette as part of the Rules. The mode followed in 1926 and 1927 was repeated in 1932 and 1933 and also presumably in 1931	 though the notification of that year has not been printed in the record of this case. This view was taken by the Full Bench of the ' Madhya Bharat High Court in Raj Kumar Mills Ltd. vs Madhya Bharat State (1). The question which is involved in these appeals also arose in that case. It was observed by the Full Bench : "This Notification makes it abundantly clear that His Highness the Maharaja ordered that the industrial tax due on the amount of the managing agent 's commission on profits be recovered. This being. an order of the (1) A.I.R. 1953 Madbya Bharat 135. 868 ruler	 who enjoyed sovereign Powers	 that order is not open to challenge. This is a mandate emanating from a sovereign and as such has the force of law. This Court has	 therefore	 no power to go behind the order and enquire as to whether the managing agent 's commission on profits is an item of expenditure solely incurred for the 'purpose of earning profits or not: In this view of the matter the point at issue is concluded by Huzur Shri Shanker order No. 173 dated 29th June	 1933. " Thus view was affirmed by the High Court of Madhya Pradesh in the judgment under appeal. In our judgment	 the two notifications cannot be described as "judicial 	interpretation". If any this	 they must be interpreted as legislative exposition of R. 3(2)(ix) and in the nature of an explanation. This Court in Ameer un nissa Begum vs Mahboob Begum in dealing with the 'Firmans" of His Exalted Highness the Nizam of Hyderabad	 observed as follows : "It cannot be disputed that prior to the integration of Hyderabad State with the Indian Union and the coming into force of the Indian Constitution	 the Nizam of Hyderabad enjoyed uncontrolled sovereign powers. He was the supreme legislature	 the supreme judiciary and the	 supreme head of the executive	 and there were no ;constitutional limitations upon his authority to act in any of these capacities. The 'Firmans ' were expressions of the sovereign will of the Nizam and they were binding in the same way as any other law; nay they would override all other laws which were in conflict with them. so long as a particular 'Firman ' held the field	 that alone would govern or regulate (1)A.I.R. 869 the rights of the parties concerned	 though it could be annulled or modified by a latter 'Firman ' at any time that the Nizam willed. " The same can be said of the Ruler of the Holkar State. When to the order of the Ruler was added the usual mode of making and promulgating rules	 the position which emerges is really unassailable. Mr. Desai in attempting to show that the ruling does not apply to the case	 raised two contentions. The first was based upon a more recent decision of this Court in Madhaorao vs State of Madhya Bharat (1)	 where certain Kalambandis of the Maharaja of Gwalior were considered. This Court in deciding whether the Kalambandis were existing law under article 372 of the Constitution	 observed : "In dealing with the question as to whether the orders issued by such an absolute monarch amount to a law or regulation having the force of law	 or whether they constitute merely administrative orders	 it is important to bear in mind that the distinction between executive orders and legislative commands is likely to be merely academic where the Ruler is the source of all power. There was no constitutional limitation upon the authority of the Ruler to act in any capacity he liked ; he would be the supreme legislature	 the supreme judiciary and the supreme head of the executive	 and all his orders	 however issued	 would have the force of law and would govern and regulate the affairs of the State including the rights of its citizens."	 It was	 however	 pointed out in the case that even where an order is issued by the sovereign ruler	 one must look to the character of the order and its content to find out whether it enacted a binding rules (1) ; 870 Mr. Desai has constructed his entire argument on the basis of these observations	 and has contended that the orders only expressed an opinion and did not bind. He pointed out as the second limb of his argument that these notifications were not expressed as a rule but as an order	 and that they did not seek to amend the rules	 nor to add to them. He referred to other notifications in which a legislative act was clearly discernible	 as for example	 Notification No. 22/Com. dated May 17	 1946	 by which for the existing Rule 4	 a new Rule was substituted. An examination of the Rules	 however	 shows that there was no set pattern of language. Some of the Rules do not read like rules at all. Notes have been appended to the rules	 which are not rules proper	 and R. 29 says : "All matters not dealt with in these rules may be submitted to the member incharge.	 Commerce and Industry Department for decision. " The existence of such a rule seems to obliterate the frontiers between legislative	 judicial and executive exercise of the power of a State	 such as we understand it. There being no invariable use of a clear cut legislative language	 each general order emanating from the sovereign ruler and promulgated in the same manner as any other rule and having its roots in a resolution of the Cabinet must be regarded as one binding upon the subject. This is the purport of the decisions of this Court	 and the present case falls in line with those which have been previously decided. There is nothing in the content	 the character or the nature of these notifications	 which would put them on a level lower than the Rules	 which had been earlier promulgated. In our opinion.	 the judgment of the High Court under appeal is correct	 and the appeals are accordingly dismissed with costs	 one set. Appeals dismissed.

By a Cabinet Resolution of the Holkar State certain Rules known as The Indore Industrial Tax Rules were framed for the purpose of levying industrial tax. After the decision of the Privy Council in cherry Railway Go. 	 Ltd. vs Commissioner Income	 tax	 (1931) L. R. 58 1. A. 239	 disallowing deduction 	 of Commission paid out of profits to agents from the assessable profits; the Government of Holkar State of which the Maharaja was the Supreme Ruler; issued certain Notifications ordering that the Agents ' Commission on profits should not be allowed to be deducted from the assessable profits. The appellants who under an agreement paid commission to their agents out of the company 's net profits contended	 inter alia	 that the Notifications in question did not have the force of law and was not enforceable against the appellants. Held	 that every general order emanating from the sovereign ruler having its roots in a resolution of the cabinet must be regarded as a law binding on the subject and the Notifications disallowing commission paid to	 agents to be deducted from the assessable profits were therefore binding on the appellants	 because that was the normal mode by which laws were made in the Holkar State. Rajkumar Mills Ltd. vs Madhya Bharat State	 A. I. R. 1953 Madhya Bharat 135	 approved. Ameer un nissa Begum vs Mahboob Begum	 A. I. R. 	 followed. The Union Cold Storage Co.	 Ltd. vs Anderson	 (1931) 16 T. C. 293 and The Indian Radio and Cable Communications Co.	 Ltd. vs Commissioner of Income tax	 	 discussed. Madharao vs State of Madhya Bharat	 ; 	 referred to. 860