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Issues Involved:
1. Taxability of the managing director's remuneration u/s 7 of the Indian I.T. Act, 1922. 2. Inclusion of the managing director's remuneration in the income of the assessee during the relevant year. Summary: Issue 1: Taxability of Managing Director's Remuneration u/s 7 of the Indian I.T. Act, 1922 The primary question was whether the managing director's remuneration is taxable under s. 7 of the Indian I.T. Act, 1922. The assessee was the managing director of two companies: Surrendra (Overseas) Pvt. Ltd. and Aminchand Pyarelal (Calcutta) Ltd. The court examined the nature of the relationship between the assessee and these companies to determine if he was an agent or a servant. For Surrendra (Overseas) Pvt. Ltd., the court noted that the articles of association provided the assessee with significant powers, including appointing and removing directors. These powers indicated that the assessee was not a servant but an agent of the company. Therefore, his remuneration was not taxable under s. 7 of the Act. For Aminchand Pyarelal (Calcutta) Ltd., the court found that the company's articles of association and the supervisory control exercised by the board of directors over the assessee indicated that he was an employee of the company. Consequently, his remuneration was taxable under s. 7 of the Act. Issue 2: Inclusion of Managing Director's Remuneration in the Income of the Assessee The court agreed that the answer to this question should follow the determination of the first issue. Since the remuneration from Surrendra (Overseas) Pvt. Ltd. was not taxable under s. 7, it should not be included in the assessee's income. Conversely, the remuneration from Aminchand Pyarelal (Calcutta) Ltd. was taxable under s. 7 and should be included in the assessee's income. Conclusion: Question No. 1: - With regard to Surrendra (Overseas) Pvt. Ltd., the answer is in the negative and in favour of the assessee. - With regard to Aminchand Pyarelal (Calcutta) Ltd., the answer is in the affirmative and against the assessee. Question No. 2: - With regard to Surrendra (Overseas) Pvt. Ltd., the answer is in the negative and in favour of the assessee. - With regard to Aminchand Pyarelal (Calcutta) Ltd., the answer is in the affirmative and against the assessee. The court made no order as to costs due to the divided success of the parties.
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