9,000 as directors fee for the year ending on June 30, 1940, companyresponding to the assessment year 1940 41.
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 or otherwise under the Act ?
Under Section 66 2 of the Income tax Act, 1922, the Appellate Tribunal made a statement of the case to the High Court on the following questions of law Whether the directors remuneration of Rs.
The assessee received for the financial year 1948 49 by way of directors fee a sum of Rs.
The assessee claimed that the remuneration paid to him should number be taxed for the relevant assessment year as it will result in double assessment.
The predecessor of the assessee, Mr. C.B. Lall, was similarly paid a remuneration of Rs.
There has, therefore, been a double assessment of this sum.
Meanwhile the assessee was also assessed on the above remuneration in his 1941 42 assessment which was paid earlier in 1940.
This disallowance was upheld in appeal.
Ramaswami, J. The appellant, Shri Ishwar Lal, hereinafter referred to as the assessee, was one of the Directors of M s. J. N. Singh Co. Ltd., hereinafter referred to as the companypany.
The claim of the assessee was rejected by the Income tax Officer and also by the Appellate Assistant Commissioner in appeal.
878 F dated March 21, 1922, as amended by Notification No.
The assessment year in this case is 1950 51, the previous year being the financial year 1949 50.
The companypany did number claim the amount paid as remuneration to the directors as revenue expenditure in view of the orders of the income tax authorities passed for the assessment year 1941 42.
8 dated March 24, 1928.
The assessee took the matter in appeal to the Income tax Appellate Tribunal which dismissed the appeal holding that since the companypany did number claim the amount paid to the assessee as revenue expenditure the question of allowance or disallowance of such a claim did number arise, with the result that exemption was number available to the assessee according to the Notification No.
10,000 received by the assessee from Messrs. J. N. Singh and Co. Ltd., under the terms of the shareholders resolution dated the 8th February, 1949, is exempt from tax under Notification No.
I, therefore, direct that this sum shall number be subjected to tax in his personal assessment but will be included in his total income for rate purposes.
This and other similar amounts paid to other directors were claimed by the companypany as revenue expenditure, but the claims were disallowed by the Income tax Officer.
9,000 on account of directors remuneration was disallowed.
The resolution was companyfirmed in an extraordinary general meeting of the shareholders held on February 8, 1949, but the assessee was actually paid this sum as a remuneration on April 5, 1949.
This remuneration was paid to the assessee in pursuance of a resolution passed at a meeting of the board of directors held on January 6, 1949, which read as follows Resolved that the remuneration of the three directors R. B. Mr. Suraj Narain, R.B. Mr. Devi Singh and Mr. Ishwar Lal be fixed at Rs.
10,000 each for the year 1948 49 and these amounts shall be payable out of the profits of the companypany.
As a result of the disallowance the directors claimed that the tax paid on the respective amounts paid to them had resulted in double assessments and refunds should be granted.
The disallowance was companyfirmed on appeal by the Appellate Assistant Commissioner.
This appeal is brought by certificate granted by the High Court under Section 66A 2 of the Income tax Act, 1922.
By its judgment dated February 5, 1962, the High Court answered the questions in favour of the Commissioner of Income tax and against the assessee.
The order of the Commissioner of Income tax in the case of Mr. C.B. Lall dated April 2, 1945, reads as follows In the 1941 42 assessment of M s. J.N. Singh and Co. Ltd. a sum of Rs.
The Commissioner of Income tax accepted this claim.
The companypany did number pay any such remuneration for the years ending June 30, 1941, to June 30, 1948, and thereafter, the remuneration was paid for the first time to the assessee and other directors for the previous year ending on June 30, 1949, companyresponding to the assessment year 1950 51.
