TMI Blog2000 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned with the assessment years 1973-74 and 1974-75 in these appeals. Common questions of law arise. They read (see [1994] 208 ITR 14, 17) : "1. Whether the amount of Rs. 26,221 being one third of the slim of Rs. 78,663 paid to the Life Insurance Corporation by Sarangpur Mills for purchase of deferred annuity policy is includible in the hands of the assessee as income chargeable under the head 'Salaries' '? 2. Whether, on the facts, circumstances and the evidence on record. the Income-tax Appellate Tribunal was right in law in coining to the conclusion that the amount of Rs. 26,221 utilised by Sarangpur Mills towards purchase of single premium for obtaining the deferred annuity policy did not form part of remuneration payable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sarangpur Cotton Mfg. Co. Ltd. held on April 12, 1973. Resolution No. 2: Resolved that subject to the approval of the company in general meeting to be obtained by way of abundant safety and caution, for the financial year 1972, the amount of commission payable to each of the managing directors, Shri Navnitlal Sakarlal, Shri Nandkishore Sakarlal and Shri Saurabh Navnitlal under the respective managing director agreements executed with each of them should be expended in the purchase of single premium deferred annuity policies from the Life Insurance Corporation of India on the life of the concerned managing director so as to provide for the payment of annuity to each of them for his life and upon his death to his dependents, such paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty policies from the Life Insurance Corporation of India on the life of each of the said three managing directors concerned so as to provide for the payment of annuity to each of them for his life and upon his death to his dependants, such payments to commence from the date of his retirement from the company as a managing director or such other date as may be mutually agreed upon between the company and the concerned managing director, it being clarified that the reappointment of a managing director on the expiry of his present tenure of office will not amount to his having retired as managing director or having ceased to be a managing director of the company or from the date of his death whichever shall occur first provided always that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal accepted the contention on behalf of Nandkishore that if clause 6(e) of the agreement and the resolution of the board were read in the proper light, it was clear that a portion of the remuneration which was utilised for the purchase of the deferred annuity policy could not be said to have accrued to the managing director but was diverted away before it reached the assessee. Therefore, the amount utilised for purchase of the deferred annuity policy by the Sarangpur Mills was not assessable as remuneration in the hands of the assessee under the head "Income from salaries." Arising out of the order of the Tribunal, at the behest of the Revenue, the two questions aforestated were referred to the High Court of Gujarat. The High Court affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor agreements executed with each of them should be expended for the purchase of single premium deferred annuity policies on the lives of the managing director. The resolutions set out the format of resolutions to be passed by the extraordinary general meetings of the mills ; they are in exactly the same terms. The resolutions do not refer to clause 6(e) of the agreements. They do not say that the managing directors shall not be paid any remuneration or any part of such remuneration. In fact, they refer specifically to "the amount of commission payable to each of the managing directors" and resolve that that commission payable to each of the managing directors shall be "expended in the purchase of annuity policies on the life of the concer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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