Law:

Section:

JUDGMENT Bhandari, CJ. and Falshaw, J.-This is a reference under subsection (1) of section 66 of the Indian Income-tax Act. One Adishwar Lal, treasurer of the Central Bank of India Limited, died on 16th April, 1950, leaving behind him a son by the name of Shil Chandra and a considerable amount of movable and immovable property. Shil Chandra succeeded his father as treasurer of the bank and earned an income of Rs. 23,286 during the year 1950-51. The Income-tax authorities assessed this income under the head "Profits and gains of business" and added it to the income of the Hindn undivided family of which Shil Chandra is the karta. The order of the Income-tax authorities was upheld by the Tribunal in appeal. The Tribunal has now referred the following two questions to this Court under the provisions of sub-section (1) of section 66: "(1)Whether in the facts and circumstances of the case and on a true construction of the agreement between the Central Bank of India and Shil Chandra, the salary and other emoluments received by Shil Chandra as treasurer of the said bank are assessable under the head 'Salary' or under the head 'Profits and gains of business'? and (2)Whether in the facts and circumstances of the case Shil Chandra's emoluments as treasurer of the Central Bank of India Limited were rightly assessed in the hands of the Hindu undivided family of which he is the karta?" The answer to the question whether the remuneration received by the assessee is assessable under the head "Salary" or under the head "Profits and gains of business" must turn on the decision of the question whether the assessee was, during the period to which the return relates, a servant of the bank or an independent contractor. A servant is a person subject to the command of his master as to the manner in which he shall do his work: Yewens v. Noskes [1880] LR 6 QBD 532 ; Goolbai v. Pastonji AIR 1935 Bom. 333. An independent contractor, on the other hand, is one who, exercising an independent employment, contracts to do a piece of work according to his own methods, and without being subject to the control of his employer except as the result of the work. (Words and Phrases, Second Series,…

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