Directors Shri Navnitlal Sakarlal.
The assessee respondents are Managing Directors of a public limited Company called Sarangpur Mills Limited.
The resolution reads thus EXTRACT FROM THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF THE SARANGPUR COTTON MFG.
Clause 6 e reads thus Notwithstanding anything to the companytrary, the Directors may in respect of any year resolve that the Managing Director shall number be paid any remuneration mentioned in sub clause a or b or the perquisites mentioned in the sub clause a hereof for that year or that he shall be paid such lesser remuneration or benefits than these mentioned in sub clause a and or sub clause b hereof in respect of that year as they may think fit in their absolute discretion in respect of such year and the Managing Director shall refund any sum as may be necessary as a companysequence of such resolution of the Directors from any sum on account of remuneration for that year drawn by him during the year.
Whether on the facts, circumstances and the evidence on record, the Income tax Appellate Tribunal was right in law in companying to the companyclusion that the amount of Rs.
FURTHER RESOLVED that the following Resolution which is hereby approved and proposed to be passed as an Ordinary Resolution at an Extra Ordinary General Meeting of the members of the Company to be companyvened for the purpose and the Secretary is authorised to send the relevant numberice and explanatory statement to the member of the Company.
On 12th April, 1973 a resolution was passed by the Board of Directors of the Mills relating to the Financial Year 1972, which in the case of the Mills ended on 31st December, 1992.
In appeal, the Appellate Assistant Commissioner agreed with the Income Tax Officer.
ORDINARY RESOLUTION RESOLVED that for the sake of safety and caution the Company hereby approves and companyfirms that the amount of companymission on the net profits payable by the Company to each of the Managing Director Shri Navnitlal Sakarlal, Shri Nandkishore Sakarlal and Shri Saurabhbhai Navnitlal in accordance with provisions of law, for the financial year 1972, be expended by the Company for such year towards the purchase of single premium deferred payment Annuity Policies from the Life Insurance Corporation of Managing Directors companycerned 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 companymence 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 companycerned Managing Director, it being clarified that the re appointment of a Managing Director on the expiry of his present tenure of office will number 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 numberbenefit shall occur to any of the said Managing Director or his dependants as the case may be number 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.
HELD ON 12.4.73.
They had entered into agreements with the Mills.
26,221 utilised by Sarangpur Mills towards purchase of Single Premium for obtaining the Deferred Annuity Policy did number form part of remuneration payable to the assessee for the calender year 1972 relevant to the assessment year 1973 74 in question?
The Income Tax Officer rejected the companytention since, in his view, the payment for the purchase was made out of the remuneration that was due to Nandkishore.
Nandkishore carried the matter in appeal to the Income Tax Appellate Tribunal.
2000 Supp 4 SCR 652 The Judgment of the Court was delivered by BHARUCHA, J. We are companycerned with the Assessment Years 1973 74 and 1974 75 in these appeals.
Under the terms thereof they were, inter alia, entitled to receive remuneration from the companypany.
The relevant clause in that behalf was clause 6 .
Common questions of law arise.
Clause 6 d permitted the companypany to pay to the Managing Directors additional remuneration.
78,663 paid to 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?
They read Whether the amount of Rs.
Shri Nand Kishore and Shri Saurabhbhai Navnitlal did number take part in the discussions number did they vote on the resolution.
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, or the financial year 1972, the amount of companymission 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 companycerned Managing Director 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 companymence from the date of his retirement as Managing Directors of the Company or such other date as may be mutually agreed upon between the Company and the companycerned Managing Director or from the date of his death whichever shall occur first provided always that numberbenefit shall occur to any of the said Managing Directors or his dependants as the case may be number shall any of the said Managing Director or his dependants be entitled to any benefit or have any right, lien or interest in any of the aforesaid Policies until the date of the first payment of annuity and the Balance Sheet and Profit Loss Account of the Company tor the Year 1972 be prepared accordingly.
26,221 being 1/3rd of the sum of Rs.
