9911796707
TMI Blog2000 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... es' '? 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 assessee for the calendar year 1972 relevant to the assessment year 1973-74 in question ?" The assessee-respondents are the managing directors of a public limited company called Sarangpur Mills Limited. They had entered into agreements with the mills. Under the terms thereof they were, inter alia, entitled to receive remuneration from the company. The relevant clause in that behalf was clause (6). Clause 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 payments to commence from the date of his retirement as a managing director of the company or such other date as may be mutually agreed upon between the company and the concerned managing director or from the date of his death whichever shall Occur first provided always that no benefit shall occur to any of the said managing director or his dependants as the case may be nor shall any of the said managing director or his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naging 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 benefit shall occur to any of the said managing director or his dependants as the case may be nor shall any one of the said managing directors or his dependants be entitled to any benefit or have any right, lien or interest in the aforesaid annuity policies until the date of the first payment of the annuity. The directors, Shri Navnitlal Sakharlal, Shri Nandkishore and Shri Saurabhbhai Navnitlal did not take part in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 affirmed the decision of the Tribunal. In its view, the resolutions made it quite clear that the intention was not to create any benefit either in favour of the assessees or their dependants or to create any right, lien or interest in the policy until the date of the first payment of annuity. The payments of the annuity were to commence from the date of retirement of the assessees or from the date of their death, whichever occurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 concerned managing director." It is impossible, in the circumstances, to conclude that the amounts of the commission that were expended to purchase the policies had been diverted and had not accrued to the managing directors. A proper construction would be that such commission had accrued to them at the end of the relevant financial years and that thereafter the sums thereof were resolved to be spent to purchase annuity policies for e ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
