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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 ..... s the order dated 29.6.2001 passed by the Income Tax Appellate Tribunal, Lucknow Bench, Lucknow [hereinafter referred to as the "Tribunal"] for the different Assessment Years, whereby the Tribunal dismissed the appeals preferred by the assessees/appellants. The unsuccessful appellant has also assailed the order dated 16.9.1996 passed by the Assessing Officer as also the judgment and order dated 11.4.1997 passed by the Commissioner of the Income Tax. In nutshell, the facts of the case are that assessees/appellants, namely, Sandeep Kohli and Vishal Kohli, were Directors of M/s Kohli Brothers Colour Lab Private Limited [hereinafter referred to as the "Company"], which is incorporated under the provisions of the Companies Act, 1956. Appellants are working for the Company under the supervision and control of the Board of Directors of the Company as stipulated under the Articles of Association of the Company. For rendering services of the Company, appellants received remuneration as per the resolution passed by the Board of Directors of the Company. On perusal of the Assessment orders pertaining to the Assessment Years 1986-1987 to 1992-1993, it would be evident that appellants received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 finding on the present assessment year different than the stand of earlier-assessment year ?" Sri N.K. Seth, Senior Advocate, appearing on behalf of the appellants has submitted that appellants being the Directors of the Company had discharged/acted in dual capacity viz. when the Director sit in the meeting of Board of Directors, he acts as a Director and when he is executing and doing the affairs of the Company on day-to-day basis transacting business of the company, he acts as an employee of the Company. For rendering services in the company, the appellants received remuneration as per the resolution passed by the Board of Directors of the Company. Sri Seth submits that as per the Article of Association of the Company, the Board of Directors have control and supervision and for carrying on the business operations of the Company, the provision of remuneration has been provided which is to be fixed by the Board of Directors. His submission is that as per Clause 58 of the Article of Association, the relationship of employer and employee betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Bombay High Court rendered in the case of Commissioner of Income Tax, Bombay Versus L. Armstrong Smith [14 ITR 606]; judgment of the Karnatka High Court rendered in the case of Commissioner of Income Tax Versus M.S.P. Rajas; and judgment of this Court rendered in the case of The Commissioner of Income Tax-I Versus M/s Goel Builders passed in Income Tax Appeal No. 127 of 2005 along with connected appeals decided on 24.5.2010. Per contra, Sri D.D.Chopra, learned Counsel for the respondent has submitted that the impugned order passed by the Tribunal is correct and just and there is no illegality and infirmity insofar as while upholding the order passed by the Assessing Officer and the First Appellate Authority, the Tribunal had concluded that the Director appointed as Whole Time Director cannot be considered to be an employee or servant and further the relationship of master and servant is not proved between the company and the assessees and as such, the remuneration paid to the Director cannot be treated as Salary and the appellants are not entitled to the deduction under Section 16 (1) of the Act. Elaborating his submission, Sri Chopra submits that the Tribunal, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled 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 the Article of Association provided that the Board of Directors shall have power to appoint, from time to time, any other person or persons to be Additional Director or Director but the total number of Directors shall not at any time exceed the maximum number fixed by the Articles. Clause 43 of the Article of Association provided that no Director shall retire by rotation until and otherwise decided by the Company in a general meeting. Clause 44 provided that each Director shall receive out of funds of the Company by way of remuneration, a sum not exceeding Rs.2500/- or any other amount as may be decided by the Board for each meeting of the Board or any Committee or Sub-Committee thereof attended by him in addition to his traveling, boarding and lodging and other expenses incurred. Clause 58 of the Article of the Association provided that the Board of Directors may also appoint one or more Whole Time Directors to look after and carry on day to day operations of the Company and their remuneration shall also be fixed by the Board. The Whole Time Directors s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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