TMI Blog1950 (12) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation under Section 15(2)(c) of the Indian Income-tax Act ? The case is concerned with assessments made on the assessees in respect of the years 1943-44, 1944-45 and 1945-46. The point raised is the same in respect of all three assessments and therefore only one question of law has been formulated. The assessees, Messrs. Birla Brothers Limited, are a company-residing in British India which have business activities in Calcutta, Delhi, Bombay and in the Indian State of Gwalior. The company s activities consist of banking, money-lending, trading in commodities, dealing in shares and securities and conducting the business of managing agents of various concerns all over India. As part of the managing agency business the assessees we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse the directors fees are legitimate expenses which can be set off against the earnings for the purposes of arriving at the net income. The taxing authorities however contended that as part of the income of Messrs. Birla Brothers was not liable to tax by reason of Section 14(2)(c) of the Indian Income-tax Act the whole of the directors fees could not be treated as legitimate expenses which could be deducted from the gross income for the purposes of arriving at the taxable income. It was suggested that only a proportion of the directors fees could be allowed as a legitimate expense for earning the income taxable in India and therefore it was said that the proportion of the directors fees which could be properly attributable to ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporated under the Companies Act, 1929. The directorship and the whole of the government of the company were in England. The appellant was resident in the United States and had resided there since 1919. At no material time was the respondent ever in England, but he devoted his time to furthering the interests of the company in North America. The appellant received remuneration as provided by the company s articles, and it was paid to him as a director without any reference to the particular tasks he performed in North America, in respect of which he received no additional remuneration. It was held by the General Commissioners that the appellant was chargeable to income-tax upon his remuneration as a director under Schedule E, Rule 6, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to me quite clear that their remuneration is an expense which can be set off against the income of this Calcutta business. For the purpose of taxation the income made in Gwalior is excluded except for certain purposes. But that does not mean that the directors fees are not to be deducted. It is conceded that there is no provision in the Income-tax Act for apportionment of directors fees and unless there is some statutory provision I cannot see how such an apportionment could be made except by agreement. Had it been agreed that part of the fees should be specifically attributable to certain activities then no difficulty would arise. But as I have said, there is no such arrangement suggested in this case. How therefore could such an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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