Law:

Section:

Section 15 of the income-tax act, 1961-Salaries-Chargeability-Assessee, managing director of a closely-held company, withdrew monthly salary of Rs. 2,000 in terms of company's resolution and articles of association-declared such salary receipts in his income-tax returns for assessment years 1961-62 and 1962-63-Company subsequently declared that such salary withdrawals were unlawful entailing their surrender-ITO and AAC treated salary as assessee's taxable income-Tribunal deleted such addition-Whether tribunal justified in law-Held, on facts, no Facts The assessee was the managing director of K (P.) Ltd. which was a closely-held company in which the assessee and the members of his family were substantially interested. He was so appointed by a resolution, dated 25-8-1960, of the board of directors. The said resolution as well as articles of association of the company envisaged the payment of salary. The assessee started withdrawing monthly salary of Rs. 2,000 from 15-5-1960, although no formal resolution was passed, and he was meeting part of his household expenses from those withdrawals. Necessary entries were duly made in the books of the company and the assessee. In his return for assessment years 1961-62 and 1962-63, the assessee disclosed the amount of those salaries and sought assessment thereon. On 12-7-1962, the board of directors of the company passed a resolution declaring; salary already drawn by the assessee as Being without board's authority and the relevant entries were, accordingly, reversed in the company's books. He was, however, sanctioned same remuneration with effect from 1-1-1962. The assessee thereafter filed revised returns excluding the salary income so drawn. The ITO, however, treated the amounts as part of the assessee's income and held that their subsequent surrender to the company could not obliterate their accrual and receipt earlier by the assessee during the relevant 'year. On appeal, the AAC upheld the ITO's order observing, inter alia, that this belated surrender was a sort of an advantage in the matter of income-tax assessment of the company in as much as it was not having taxable income in those years. On further appeal, the…

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