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TMI Blog2013 (12) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Revenue. - Income Tax Appeal No. 20 of 2001, Income Tax Appeal No. 21 of 2001, Income Tax Appeal No. 22 of 2001, Income Tax Appeal No. 23 of 2001, Income Tax Appeal No. 24 of 2001, Income Tax Appeal No. 25 of 2001, Income Tax Appeal No. 26 of 2001, Income Tax - - - Dated:- 19-7-2012 - Hon'ble Rajiv Sharma And Hon'ble Vinay Kumar Mathur,JJ. ORDER Heard Sri N.K. Seth, Senior Advocate, assisted by Sri Ashish Chaturvedi, learned Counsel for the appellant and Sri D.D. Chopra, learned Counsel for the respondent. Since in the above captioned income-tax appeals, common question of law and facts, relating to two different Assessees, namely, Sandeep Kohli and Vishal Kohli, who were Directors of M/s Kohli Brothers, Colour Lab Private Ltd., Lucknow, are being involved, as such, all the income tax appeals have been clubbed together and are being disposed of by a common order. Through the above captioned income tax appeals under Section 260-A of the Income Tax Act, 1961 [hereinafter referred to as the "Act"], the appellant challenges the order dated 29.6.2001 passed by the Income Tax Appellate Tribunal, Lucknow Bench, Lucknow [hereinafter referred to as the "Tribunal"] for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide order dated 29.6.2001, dismissed the appeals of the appellant by a common order on the ground that there being no relationship of master and servant between the company and the Assessee and as such, the remuneration paid to the Director cannot be treated as salary and the Assessee is not entitled to the standard deductions claimed by them under Section 16 (C) of the Act. Hence appellants have approached this Court by way of appeals. It has been pointed out by the learned Counsel for the parties that all the income tax appeals, referred to hereinabove, were admitted on the substantial question of fact as formulated in the memo of the appeal but after hearing the Counsel for the parties, a co-ordinate Bench of this Court, vide order dated 3.4.2012, formulated two substantial questions of law for adjudication of the case, which are as under : "1. Whether there can be a relationship of Employer and Employee between the Company and its Director and whether the appellant as a Director is entitled for deduction under the Head of Salary keeping in view the Sections 15 and 16 (1) of the Income Tax Act ? 2. Whether the revenue is estopped from changing its stand while recording a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 16 (1) of the Act, assessing the income and the remuneration received from the Company as income from other sources. Elaborating his submission, Sri Seth has submitted that the First Appellate Authority as well as the Tribunal have failed in not considering the fact that there being relationship of the master and servant between the Company and the Assessee, dismissed the appeal of the appellants by holding that the remuneration paid to the Director cannot be treated as Salary and the Assessee is not entitled to the standard deductions claimed by him under Section 16 (C) of the Act. He submits that the remuneration received by the assessee was for managing the Company's business, as such, appellants are entitled for standard deductions under Section 16 (C) of the Act. In support of his submissions, Sri Seth has relied upon the judgment of the Hon'ble Supreme Court in the case of Ram Prasad Versus Commissioner of Income-Tax, New Delhi [1986 ITR 122 (S.C.), Justice Deoki Nandan Agarwala Versus Union of India and another [237 ITR 872 (SC); the judgment of the Bombay High Court rendered in the case of Commissioner of Income Tax, Bombay Versus L. Armstrong Smith [14 ITR 606]; ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol which was to be exercised in relation to the duties of Sandeep Kohli and there is no record showing the details of actual services rendered by Sandeep Kohli. While relying upon the judgment of the Hon'ble Supreme Court in the case of Ram Prasad (Supra), Sri Chopra submitted that a director of a company is not a servant but an agent inasmuch as the company cannot act in its own person but has only to act through Directors who qua the Company have the relationship of an agent with the Company. He has also relied upon the judgment of the Orissa High Court in the case of CIT Versus Smt. Shanti Devi [(1993) 199 ITR 800 (Ori)]; judgment of this Court in the cases of Sardar Harpreet Singh Versus CIT [1991 (187) ITR 679 (All)]; and CIT Versus Lakshmipati Singhania [1992 ITR 598 (Alld.)] We have heard learned Counsel for the parties and perused the records. Clause 33 of the Article of Association provided that subject to the provisions contained in the Article of Association and limitation imposed by the Companies Act, 1956, the Director shall be entitled to exercise all such powers and to do all such acts and things as the Company is authorised to exercise and do. Clause 41 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee/appellant. Thus, the appellants failed to establish the relationship of an employee and employer and this being so, the assessee was rightly assessed by the Income Tax Officer whereby he disclosed the claim for deduction under Section 16 (1) of the Act. The Tribunal after considering the various case laws relied upon by the appellants, recorded a clear cut finding of fact that the Directors appointed as Whole Time Director cannot be considered to be the employee of the Company and approved the findings recorded by the Commissioner, Income Tax. Thus, the Appellate Authority, i.e. Commissioner of Income Tax (Appeals) as well as the Tribunal has recorded a concurrent finding of fact that the appellant has failed to bring on record any document to prove the relationship of Master and Servant between the assessee and the company. It is pertinent to add that a finding of fact has been recorded by all the authorities below and as such it is not justified to reappraise the same. The above view is supported by the judgment rendered in 1993 (suppl.) (4) SCC 1 O.T.M.O.M. Meyyapa Chettiar Versus O.T.M.S.M. Kasi Viswanathan Chettiar and another. Further Hon'ble Apex Court in severa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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