Law: Income Tax Act, 1922

Section: 24

Law: Income Tax Act, 1922

Section: 24

Section 28(i), read with sections 15 and 72 of the Income-tax Act, 1961 [Corresponding to section 10, read with sections 7 and 24 of the Indian Income-tax Act, 1922] - Business income - Chargeable as - Assessment year 1950-51 - Under an agreement, assessee was appointed treasurer of a bank for its branches, sub-agencies and pay officer - Assessee had to provide staff for cash section of bank had power to suspend, transfer of dismiss any member of staff, had to perform duties, liabilities and responsibilities by custom or contract usually devalue upon a treasurer and was also responsible for protection of property of bank and for receipt of any bad money or tax money, cloth or bullion of any forged or fraudulently altered currency notes - In carrying out his duties under contract he was not to be controlled or supervised by bank - Whether receipt of remuneration for holding office does not necessarily give rise to relationship of master and servant between holder of office and person who paid remuneration - Held, yes - Whether having regard to terms of contract, contract was for service and assessee was not servant of Bank and therefore remuneration received by assessee was not salary within meaning of section 7 of 1922 Act - Held, yes - Whether considering nature of duties performed, obligation undertaken together with right to remuneration subject to compensation for loss arising to bank from assessee's acts or omission or of servants introduced by him into business of bank, assessee could be regarded as following a vocation -Held, yes - Whether therefore, remuneration received by assessee was to be computed under section 10 of 1922 Act and loss suffered in that vocation in any year could be carried forward to next year to be set off against profits of succeeding years - Held, yes FACTS Under an agreement dated 2-1-1931, the assessee was appointed treasurer of a Bank in respect of certain branches, sub-agencies and pay offices. The assessee was assessed to income-tax as representing his HUF and the income received by the assessee under the terms of the agreement with the Bank was treated as income of the HUF. In the previous year corresponding to the…

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