Law:

Section:

Section 15 of the Income-tax Act, 1961 (Corresponding to section 7 of the Indian Income-tax Act, 1922) - Salary - Chargeable as - Assessment year 1956-57 - Assessee was managing director of company - Besides certain fixed sum and allowances, he was entitled to receive commission as percentage of gross profit - Commission was assessed as salary income alongwith other remuneration - Whether question as to whether a managing director is a servant or agent of company can only be determined by articles of association and terms of employment - Held, yes - Whether in view of fact that assessee was employed as managing director to manage affairs of company in terms of its articles of association and agreement and, he could be dismissed or his employment could be terminated by company if his work was not satisfactory, it could be concluded that he was a servant of company - Held, yes - Whether, therefore, commission receivable by assessee was rightly regarded as 'salary' chargeable under section 7 of 1922 Act - Held, yes FACTS The assessee and his wife owned a large number of shares in a private limited company. By virtue of article 109 of the articles of association of the company, the assessee became the first managing director on terms and conditions embodied in an agreement between himself and the company. Under the said agreement, the assessee was to receive besides salary and allowance, commission at 10 per cent of gross profits of the company. For the assessment year 1956-57, the assessee was assessed in respect of commission of Rs. 53,913 payable which he gave up soon after the accounts were finalised but before they were passed by the general meeting of the shareholders the above amount was given up by him because the company would not be making net profits if the stipulated commission was paid to him. The assessee claimed that the said amount given up was not liable to be included in his total income because the amount had not accrued to him at all, at any rate, in the accounting year ended 31-3-1956, and that even assuming that it had accrued in the said accounting year it was not taxable under section 7 or section 10 of the 1922 Act. The Income-tax Officer,…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492