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Issues:
Interpretation of resolutions regarding payment of commission to directors for specific assessment years. Analysis: The judgment involved identical issues concerning the payment of commission to directors of a company for the assessment years 1970-71 and 1971-72. The company's memorandum and articles of association stipulated that the board of directors would decide the fixed salary or commission structure for directors. Resolutions were passed to reduce the commission rates due to company losses. The Income-tax Officer accepted the returns filed by the directors based on these resolutions. However, the Commissioner of Income-tax initiated proceedings under section 263, deeming the resolutions inconsequential as they were passed after income had accrued. The matter reached the Income-tax Appellate Tribunal, where there was a divergence of views among members regarding the timing of the resolutions in relation to income accrual. For the assessment year 1970-71, the Tribunal was tasked with determining whether the commission accrued to the assessee at the rate of 1/2 per cent. The question for 1971-72 was similar, focusing on whether the commission accrued at the rate of 1/4 per cent. The Vice-President, after hearing the matter, agreed with the Accountant Member's view that the resolutions were valid. However, the judgment highlighted discrepancies in the Vice-President's analysis, noting that he did not adequately address the factual aspects and evidence presented by the Judicial Member. The judgment referenced the case law CIT v. Shiv Prakash Janak Raj and Co. Pvt. Ltd., emphasizing the importance of determining the date of income accrual based on factual evidence. Ultimately, the High Court directed the Tribunal to rehear the appeals and reconsider the matter in light of the guidelines provided in the Shiv Prakash Janak Raj case. The Court refrained from expressing any opinion on the factual aspects, leaving it to the Tribunal to re-adjudicate the issue comprehensively. The judgment concluded by disposing of all references related to the case, emphasizing the need for a thorough reevaluation by the Tribunal based on the legal principles outlined in the Shiv Prakash Janak Raj case.
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