TMI Blog1979 (3) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... rs wherein the same issue has been raised, Those four cases were also heard along with the present case by the Tribunal on the earlier occasion as well as the AAC while disposing of the matter in accordance with the directions of the Tribunal. All the five cases were represented by the same Counsel who stated that the facts relating to all the cases were more or less same and so, the same arguments would apply to all of them. We have, therefore, heard all the cases together and proceed to record our findings in this consolidated order to which references have been made in the orders passed in the case of the other four directions who are (1) Premchand Madanani, (2) Satramdas Raitani, (3) Ledumal Madanani and (4) Harikrishnalal Madanani. 2. The claim of the assessee before the ITO was that the remuneration received by him from the aforesaid company constituted salary income and as such the standard deduction under s. 16(i) should be allowed. The ITO disallowed the claim on the ground that the remuneration received by the assessee was not assessable as salary under s. 16 of the Act. Hence, the issue arose before the AAC as to whether the relation between the assessee and the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative for the Department, on the other hand, supported the order of the AAC. He emphasised the absence of any special service agreement. Regarding the Articles of Association and the resolutions by which the directors were appointed to execute the specific items of work on remuneration he stated that theses were the normal works done by the company through the agency of its directors and so no relationship of employer and employee was brought into existence by them. He stated that there was nothing to indicate the responsibility of the directors to anybody for the proper performance of the works entrusted to them and so they cannot be said to be the employees of the company. 6. We have carefully considered the contentions of both the parties as well as the facts on record. The question that is raised in these appeals is as to whether the relation between the assessee and the aforesaid company is that of an employee and an employer. In the case of Ram Prasad(1), it was observed: "There is no doubt that for ascertaining whether a person is a servant or an agent, a rough and ready test is whether, under the terms of his employment, the employer exercises a supervisory control in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent has to do, but a master has the further right to direct how the work is to be done. A person who is subject to no directions as to the item he is to devote tot he work of another is an agent and not a servant; but a person who is required to give a definite amount of his time thereto, although allowed to exercise his discretion as to the place and manner of his work, is a servant and not and agent. The circumstances that a person is remunerated by commission only is not conclusive as showing him to be an agent and not a servant; and an agent may, in part, be remunerated by salary." Keeping the above principles in view, we proceed to examine the facts of the case. Article 64 of the aforesaid company vests control of the business of the company in the Board of Directors. Article 65 defines the powers of the Board Directors without prejudice to the general powers already laid down in Article 64. Article 65(9) states as below: "From time to time to provide for the management of the affairs of the Company either in different parts of India or elsewhere in such manner as they may think fit, and in particular to establish branch offices and to appoint any persons to be the Att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madanani is hereby appointed as Director of the Company in place of Shree Basantlal Madanani w.e.f. today. Resolution No. 10 Resolved that Shri Harikrishnalal Madanani is hereby appointed as Director of the company in place of Shree Haridas Madanani w.e.f. today. Resolution No. 8 Sri Premchand Madanani and Satramdas Raitani placed before the meeting their leave applications for five months respectively dt. 30th Dec., 1969 and 31 Dec., 69 without remuneration. The matter was discussed for their long leave in working season without remuneration. The following resolutions were passed unanimously: A. "Resolved that five months leave fo absence from Company's works without remuneration be and is hereby granted to Shree Premchand Madanani from 1st Jan., 1970 to 31st May, 1970 due to his bad health". B. "Resolved that for 5 months of leave to Shree Satramdas Raitani without remuneration be and is hereby sanctioned w.e.f. 1st Jan., 70 to 31st May, 1970 due to his bad health". Shree Premchand Madanani and Shri Satramdas Raitani did not vote for resolution being interested. Annual General Meeting Dated 29th June, 70. In view of the increased business of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them. The AAC has found that the assessees were being remunerated on a time scale of Rs. 1,250 to Rs. 2,000 per month w.e.f. 1st July, 69. It is, therefore, not true to say that the assessee was not responsible to any body for the performance of the job entrusted to him. We find that he was very much responsible to the Board of Directors for due execution of the job for which he was remunerated. If the performance of any director was not satisfactory in the opinion of the Board of Directors then his services were certainly liable to be terminated. The AAC did notice this control and supervision of the Board of Directors over the remuneration paid and the job entrusted tot he assessee but he did not attach due importance to that fact. He ignored the same merely saying that it was obvious. Though the aforesaid features taken individually may not be conclusive of the issue we are considering, yet all the factors taken together do, in our opinion, indicate that there was indeed employer and employee relationship between the assessee and the aforesaid Company. We, therefore, come to the conclusion that the remuneration received by the assessee was therefore assessable under s. 15 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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