Law: Income Tax Act, 1961

Section: 15

Income-tax Act, 1961---S.15-Salary - Waiver-Assessment -Managing Director of a Company waiving salary wholly for some months and partly for other subsequent to year of account and no understanding having been arrived at between Managing Director and Company regarding waiver, of remuneration before accrual of such remuneration, assessee, held, liable to be taxed on mount to which entitled. The assessee was appointed Managing Director of a Company on a salary of Rs. 2,000 per month. As the Company was not faring wall he did not draw any salary for the months, September to December, 1964, and for the year 1965 he agreed to draw a salary at the rate of Rs. 500 per month. The Company passed a resolution on April 30, 1965, to the effect that the assessee had waived his remuneration for the four months, September to December, 1964. Another resolution was passed on May 17, 1966, to the effect that he had agreed to draw a salary of Rs. 500 per month for the year 1965. The assessee was re-appointed from January 1, 1967, at the rate of Rs: 1,000 per month by a resolution dated February 24, 1967. In his assessment for 1965-66, corresponding to the account­ing period ending on March 31, 1965, the assessee's claim that he was assessable only on a salary of Rs. 2,000 per month for April to August, 1964, and Rs. 500 per month for January to March, 1965, he having waived the salary for the months, September to December, 1964, was rejected by the officer who assessed him on a salary calculated at Rs. 2,000 per month. Similarly, for 1956-57, the assessee's claim for assessment on a salary of Rs. 500 per month from April to December, 1965, and at Rs. .1,000 per month for January to March, 1966, was also negatived and he was assessed on the basis of Rs. 2,000 per month. Though the A. A. C. confirmed the assessments, the Tribunal held that the debt which the company owed to the assessee after August, 1964, was equal to the reduced amounts paid to the assessee and not a sum of Rs. 2,000 per month and, consequently accepted the assessee's claim. On a reference to the High Court Held, that as there was nothing in the resolutions or anywhere else to show that there was an understanding…

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