Law:

Section:

Section 16(i) of the Income-tax Act, 1961 - Salary - Standard deduction - Whether, where neither articles of association nor resolution of board of directors proved employer-employee relationship between company and assessee directors, they were entitled to standard deduction under section 16(i) in respect of their remunerations received from company - Held, no FACTS The assessee-directors were all assessed as individuals and they claimed their remuneration as 'salaries' and claimed standard deductions under section 16(i). The ITO did not accept the contention of the assessees that the remunerations received by them were salaries and, accordingly, did not allow the standard deductions. On appeal, the AAC confirmed the order of the ITO. The Tribunal, however, accepted the contention of the assessees. On reference by revenue: HELD There is no controversy that a director of a company enjoys dual capacity. He might be a director as well as an employee, but that he is an employee must not be a paper work, rather it should be proved and established on record as a fact. In the present case, articles of association were contrary/ contradictory to the proposition of dismissal of a director. The resolution spoke of allotment of work and left the matter merely to be inferred. No attempt was made to prove this fact on record. In what manner they really rendered extra service to the company as was expected and required of them in the resolution, remained only as a paper work. Thus, the relationship of employee and employer was lacking and this being so, the assessees were rightly assessed by the ITO without taking into account the claim of deduction under section 16(i). CASES REFERRED TO Ram Prashad v. CIT [1972] 86 ITR 122 (SC), Satya Paul v. CIT [1979] 116 ITR 335 (Cal.) and Sardar Harpreet Singh v. CIT [1991]187 ITR 679 (All.). A.K. Ray for the Applicant. N. Paikrai for the Respondent. JUDGMENT Mahapatra, J. - The question referred at the instance of the revenue under section 256(1) of the Income-tax Act, 1961 ('the Act') for our decision is: "Whether, on the facts and in the circumstances of the case, the relationship between the assessees and the company in which…

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