Scope of rule 86-Determination of shareholding of Director. - Income Tax - 1330/CBDT

INSTRUCTION NO. 1330/CBDT Dated: April 23, 1980 Attention is drawn to para 3 of board's Instruction No.1143 dated 25-1-78 wherein it was inter alia clarified that a director would be considered a whole-time bonafide employee, if no other employment infact has been taken up irrespective of the fact that the terms of employment permit him to do so and there is time to spare. 2. This is likely to convey that the director has the option to take up an employment in addition to the one of in which he is a whole-time bonafide employer. The correct position under the law is that a director can be a whole-time bonafide employee only if, under the terms of his employment no other employment is permissible and in fact no such employment is taken up. 3. Further in said para of the instruction, it was stated that in order to determine the percentage of share holdings of a director within the meaning of rule 86, shares actually belonging to him even though registered in other persons name have to be taken into account. It is clarified that the expression actually belonging to him even though registered in another persons name may not take within its ambit, benami holdings of shares registered in another persons name unless the benami holding is proved or admitted and openly professed to be so. 4. The instruction No.1143 dated 25-1-78 may please be treated modified to the extent referred to in paras 2 and 3 above.