9911796707
TMI Blog1962 (2) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors-R.B. Suraj Narain, R.B. Devi Singh and Mr. Ishwar Lal be fixed at ₹ 10,000 each for the year 1948-49 and these amounts shall be payable out of the profits of the company." A shareholders' meeting confirmed the resolution on February 8, 1949. The payment of the amount was made to R.B. Devi Singh on April 5, to Mr. Ishwar Lal on March 19 and to R. B. Suraj Narain on April 7, 1949. The company's accounting year ended on June 30, 1949, for the assessment year 1950-51. In this assessment year the company did not claim the total amount paid to the three directors as a deduction in its return. The amount thus remained part of its income and was subject to income-tax. In the case of each assessee a claim was made that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n according to Notification No. 878-F, dated March 21, 1922, as amended by Notification No. 8 dated March 24, 1928, could not be available to the assessees. The orders of the Income-tax Appellate Tribunal in the three cases respectively are of May 17, 1952, and May 11, 1953, in the last two of the three cases. In its order in the case of Mr. Ishwar Lal the Tribunal remarked that "the intention of the notification was (reference is to the notification already mentioned above) obviously not to tax the sum of money in the hands of both the owner of the business and the employee, provided the conditions laid in the notification were satisfied." In the case of R.B. Suraj Narain the Income-tax Officer said that "the payment does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court, given its opinion that the questions that arise are really somewhat in a different form. In giving its own opinion it drafts the questions as below : "(1)Whether in view of there being no claim for deduction of the sum of ₹ 10,000 paid as directors' remuneration to the assessee, the provisions of Notification No. 878-F, dated March 21,1922, as amended and issued by the Finance Department of the Government of India, under section 60 of the Indian Income-tax Act do not apply and the assessee is not entitled to claim exemption under that notification ? (2)If the answer to the first question is in the negative, whether even otherwise the inclusion of this amount in the assessment of the assessee in view of this am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where such sums have been paid out of, or determined with reference to, the profits of such business, and by reason of such mode of payment or determination have not been allowed as a deduction but have been included in the profits of the business on which income-tax has been assessed and charged under the head 'business': Provided that such sums shall not be exempt from the payment of super-tax unless they are paid to the assessee by a person, other than a company, and have already been assessed to super-tax………" The company has paid tax on the amount, it not having made a claim for deduction of this amount in its assessment return for the relevant assessment year 1950-51. The question then turns upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent by the company to its directors is by way of remuneration for services rendered or of a different nature, and accordingly as he decides the nature of the payment, the question of liability or nonliability to income-tax is decided. The company in the present cases never claimed the amount paid to its directors as deduction on account of the payment being for remuneration for services rendered; the income-tax authorities never had an opportunity to decide whether or not this was correct as a fact. So taking the plain meaning of the words "have not been allowed as a deduction" in the notification, it is evident that the notification applies to a case in which claim to a deduction has been made and such claim has not been allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
