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TMI Blog1984 (7) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... n the net profits of the company not exceeding Rs. 1,20,000 per annum without, however, a stipulation as regards any minimum remuneration that is ordinarily provided for an executive director. The assessee claimed expenditure against that income and it was in this context that the nature of relationship as between the assessee and the company became subject-matter of this Tribunal's decision in IT Appeal Nos. 1485 and 1486 (Hyd.) of 1977-78 and 197 (Hyd.) of 1978-79, dated 15-3-1979, in ITO v. H. Narayana Reddi [1979] 2 Taxman 75 (Mad.) for the assessment years 1973-74, 1975-76 and 1976-77. This Tribunal held, after considering the provisions of the agreement, that there was no employer-employee relationship and that the expenditure is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade on 28-7-1982. Since it was described as ' salary loss ', the assessee was apprehensive that it may not be allowed to be set off in a later year of profit and, therefore, filed an appeal claiming that it should be treated as business loss. The first appellate authority dismissed this appeal on the ground that the income or the loss on the basis of the agreement can be assessed only as ' Income from other sources ' and, hence, the question of carry forward would not arise. In other words, he charged the source from ' salary ' to ' other sources ', which had the same result as far as the assessee was concerned. This decision is in dispute before us. For the assessment year 1981-82, the assessee had a positive income. The gross income was R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee's income from the agreement cannot be assessed as ' salary income '. He, however, referred to certain passages in the said decision which, according to him, indicated that the income would be assessable as ' Income from other sources '. He claimed that the said passages should lead us to accept the revenue's claim that the loss was from ' other sources '. He pointed out that the Tribunal has been consistently taking the view that it is open to the taxpayer to convass the quantum and the nature of the amount to be set off in the year of set off, following the rationale of the various decisions of the High Courts in Addl. CIT v. Sheetalaya [1979] 117 ITR 658 (All.), Indian Aluminium Co. Ltd. v. CIT [1980] 122 ITR 660 (Cal.) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her sources '. The question has specifically been left open in the said order. Even otherwise, we cannot possibly avoid the responsibility of deciding the issue on merits. ' Business ' has been defined in clause (13) of section 2 of the Income-tax Act, 1961 (' the Act '), in an inclusive definition to include ' any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture '. The definition is exhaustive. It has ' extending ' force and does not limit the meaning of the term even as spelled out in a number of cases as for example in Lala Indra Sen, In re. [1940] 8 ITR 187 (All.). As observed by the learned authors of Kanga and Palkhivala's Law and Practice of Income-tax, " the trend of the judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable under this head ' if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E '. It is only a residuary head. Where there is a specific head, the residuary head cannot be called in aid even as repeatedly pointed out by the Supreme Court as for example in Bihar State Co-operative Bank Ltd. v. CIT [1960] 39 ITR 114, in S. G. Mercantile Corpn. (P.) Ltd. v. CIT [1972] 83 ITR 700 and Nalinikant Ambalal Mody v. S.A.L. Narayan Row, CIT [1966] 61 ITR 428. Hence, any controversy as to whether any particular income falls under one or the other head has to take this fact into consideration and not proceed as though there is a choice between the one and the other. One has to consider whether it would fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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