OPINION.
Van Fossan, Judge:As a result of renegotiation proceedings initiated by the Services and Sales Eenegotiation Section of the Office of the Under Secretary of the Navy, acting on behalf of the War Contracts Price Adjustment Board, it was determined by such section that petitioner’s profits for the year 1943 were excessive in the amount of $11,683.08, which, aftér adjustment for a tax credit of $7,055.40, required a refund to the United States of $4,627.68. The War Contracts Price Adjustment Board adopted the determination as its determination. In its answer to the amended petition, the respondent asks that we determine petitioner’s excessive profits in the calendar year 1943 to be $11,598.51, or the difference between the statutory floor of $25,000 and petitioner’s gross receipts of $36,598.51 in connection with contracts for products having a war-end use.
The petitioner, in 1943, received compensation in the total gross amount of $36,598.51, of which amount $19,131.44 represented commissions on the amount of contracts or subcontracts procured by him for his principals and $17,467.07 represented commission at 4½ per cent upon the amount of certain contracts or subcontracts of Raymond De-Icer Co. of California. The payment of no part of this latter amount was contingent upon the procurement by petitioner of any such contracts or subcontracts." There is no dispute about these facts. They were conceded by respondent.
It is contended by petitioner that his compensation to the extent of $17,467.07, the amount received from Raymond De-Icer Co. of California, is free of renegotiation since it was not derived pursuant to a contract or arrangement as defined in section 408 (a) (5) (B) of the Sixth Supplemental National Defense Appropriation Act, as amended,1 and that, therefore, the balance of his compensation, $19,-181.44, the amount received under contracts within the meaning of section 403 (a) (5) (B), is less than the minimum of $25,000 exempt from renegotiation under section 403 (c) (6).2
The petitioner and respondent agree thát the phrase in section 403 (a) (5) (B), “determined with reference to the amount of such a contract or subcontract or such contracts or subcontracts,” must be construed in connection with the statutory language quoted in the footnote. The respondent, however, seeks to limit the reference for purposes of construction to the words “contract or contracts with a Department or of a subcontract or subcontracts” so that the whole clause would read: “determined with reference to the amount of a contract with a Department or subcontract or contracts with a Department or subcontracts.” Petitioner argues that reference to the preceding language may not be so limited and that “such” contract or contracts or “such” subcontract or subcontracts relate back to the phrase “the procurement of” a contract or contracts with a Department.
Although the question at issue was that of jurisdiction, the construction of the above statutory language was considered and discussed in George M. Wolff v. Edward Macauley, Acting Chairman, United States Maritime Commission, 8 T. C. 146. In that case the respondent took the position that the petitioners were subcontractors as described in section 403 (a) (5) (B) and that by reason thereof they were excluded under section 403 (e) (2) from filing a petition with this Court for redetermination. After reviewing the legislative history of the section, this Court stated:
With this legislative history in mind, we must determine whether the petitioners, on the basis of the four subcontracts in question, are subcontractors described in section 403 (a) (5) (B). We do not think they are as to subcontract 16 and purchase order No. 71742 merely because in the former case their fee was to be computed on the total amount of contracts approved for the construction of buildings and in the latter was based on 5 per cent of estimated costs. Certainly their fee was not “contingent upon the procurement of a contract * * * with a Department or of a subcontract,” nor do we think it may be said that it was “determined with reference to the amount of such a contract or subcontract” [italics added] that is, a contract or subcontract procured by petitioners. In other words, the phrase “determined with reference to the amount of such a contract,” etc., may not be isolated, as the respondent would have it, but must be construed in connection with the preceding language and in the light of the purpose sought to be accomplished by Congress. So construed, the language of the statute aptly applies to manufacturers’ agents and sales engineers who procure Government contracts for their principals and whose compensation is contingent upon the business they are able to obtain for the principals or fixed by the amount of such business.
See also Iverson & Laux, Inc. v. James Forrestal, Secretary of the Navy, 6 T. C. 247.
Herein, as in the Wolff case, the petitioner was not a subcontractor within the meaning of section 403 (a) (5) (B) merely because his compensation was based or computed upon the amount of the contracts or subcontracts procured by his principal. Since petitioner’s compensation of $17,467.07 received from Raymond De-Icer Co. was not based or contingent upon the amount of contracts procured by him for his principal, it was not derived pursuant to subcontracts as defined in section 403 (a) (5) (B), as construed in the Wolff case.
We conclude, therefore, that petitioner’s 1943 compensation of $36,598.51 was free of renegotiation to the extent of $17,467.07. Subtracted from the total, this leaves but $19,131.44 of his compensation about which there is no dispute. However, since this amount, admittedly received on subcontracts within section 403 (a) (5) (B),is less than $25,000, it is exempt from renegotiation under section 403 (c) (6).
While no contention has been made that petitioner’s contracts fall within the definition of section 403 (a) (5)- (A), we may say in passing that petitioner’s entire compensation obviously is less than the $500,000 minimum limit applicable to section 403 (a) (5) (A) contracts by virtue of section 403 (c) (6). The result, therefore, would be the same in either case.
Reviewed by the Court.
An order will issue in accordance herewith.
(6) This subsection shall be applicable to all contracts and subcontracts, to the extent of amounts received or accrued thereunder in any fiscal year ending after June 30, 1943, whether such contracts or subcontracts were made on, prior to, or after the date of the enactment of the Revenue Act of 1943, and whether or not such contracts or subcontracts contain the provisions required under subsection (b), unless (A) the contract or subcontract provides otherwise pursuant to subsection (i), or is exempted .under subsection (i), or (B) the aggregate of the amounts received or accrued in such fiscal year by the contractor or subcontractor and all persons under the control of or controlling or under common control with the contractor or subcontractor, under contracts with the Departments and subcontracts (including those described in clause (A), but excluding subcontracts described in ■subsection (a) (5) (B)) do not exceed $500,000 and under subcontracts described in subsection (a) (5) (B) do not exceed $25,000 for such fiscal year. If such fiscal year is a fractional part of twelve months, the $500,000 amount and the $25,000 amount shall be reduced to the same fractional part thereof for the purposes of this paragraph.