TMI Blog1993 (1) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... le under the head ' Salary ' as there existed the relationship of an employee and employer ? " The facts shortly stated are that the assessee had shown the director's remuneration under the head " Salary " and claimed standard deduction under section 16(i) of the Act. The Assessing Officer, however, held that the assessee as a managing director of Pile Foundation Construction Co. (I.) Pvt. Ltd., which paid the remuneration, enjoyed wide power and control over the affairs of the company and, therefore, his position did not stand at par with that of the other employees of the company and that the existence of the contractual relationship of employer and employee could not also be established or proved. He, therefore, assessed the income un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that the Tribunal in coming to its conclusion had followed its earlier decision in the assessee's case for the assessment years 1978-79 to 1981-82. Our attention was drawn by learned counsel appearing for the assessee to the different clauses of the articles of association of the company, Pile Foundation Construction Co. (I.) Pvt. Ltd., viz., clauses 64, 66, 68 and 75. A combined reading of these clauses makes it clear that the managing director acts and discharges his duties subject to the control and supervision of the board of directors. Learned counsel for the Revenue, however, sought to impress on us that the powers of the managing director over the affairs of the company are of such wide ambit as precluding the relationship of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trol and supervision of his master. An agent, on the other hand, in the exercise of his work, is not subject to the direct control or supervision of the principal, though he is bound to exercise his authority in accordance with all lawful orders and instructions which may be given to him from time to time by his principal. But, this test is not universal in its application and does not determine in every case, having regard to the nature of employment, that he is a servant. It is the nature of the particular business and the nature of the duties of the employee which will require to be considered in each case. A person who is engaged to manage a business may be a servant or an agent according to the nature of his service and the authority o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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