Law:

Section:

Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Company, in which assessee was a managing agent, passed a resolution on 20-7-1949, for payment of special additional remuneration to assessee at rate of Rs. 15,000 per annum - In meantime, a representative suit was filed by shareholders of company for perpetual injunction from giving such extra remuneration and for declaring resolution as illegal - Temporary injunction granted by trial court was vacated on 20-7-1949, on assurance that company will not make payment of extra remuneration until disposal of suit-Trial court decreed suit but, on appeal, High Court by dated 25-11-1955 reversed decree and held that resolution was validly passed - Said remuneration, which was not paid to assessee during relevant years, was paid in 1956 - Whether in view of fact that assessee was maintaining mercantile system of accounting, aforesaid amounts accrued to him during each of years 1950-51 to 1953-54 and it was not right to say that amounts accrued to it only in November 1955, when High Court pronounced - Held, yes FACTS The assessee was a managing agent of a company. A resolution for the payment of special additional remuneration to the assessee at the rate of Rs. 15,000 per annum was passed on 20-7-1949. In the meantime, a representative suit was filed by the shareholders of the company on 16-7-1949 for perpetual injunction from giving such extra remuneration and for declaring the resolution as illegal. Temporary injunction granted by the trial court was vacated on 20-7-1949, on the assurance that the company will not make payment of extra remuneration until the disposal of the suit. The trial court decreed the suit on 31-10-1950 but on appeal, the High Court by dated 25-11-1955 reversed the decree and held that the resolution was validly passed. The company had debited the sum of Rs. 15,000 in the profit and loss account prepared by it on 22-6-1950 for the year ended 31-12-1949. For the later years, the company showed the sum of Rs. 15,000 due under the resolution to the assessee as a contingent liability. The amounts were not paid to the assessee during the relevant years. The assessee died on 16-11-1952. 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