9911796707
TMI Blog1946 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 12 of the Indian Income-tax Act. From the agreed statement of facts, it appears that the assessee, Mr. L. Armstrong Smith, was carrying on a business as general merchant and commission agent till 18th June, 1941, when his business was taken over by a private limited company of Armstrong Smith Limited. The company was incorporated under the Indian Companies Act (VII of 1913) on 24th June, 1941. Mr. Armstrong Smith holds most of the shares of the company while two of its nominees hold the rest. Under Article 58 of the Articles of Association of the company Mr. Armstrong Smith is the Chairman and Managing Director of the company. The articles further provides that he shall remain the Chairman and Managing Director until he shall res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, or in addition to, any salary or wages, which are due to him from, whether paid or not by, a company. To that sub-section there are certain provisos which, as Mr. Setalvad on behalf of the Commissioner points out, import the idea of the assessee being subject to conditions of employment or conditions of service. Section 12, which has been described by the Privy Council as being the true residual section, provides that the tax shall be payable by an assessee under the head Income from other sources in respect of income, profits and gains of every kind which may be included in his total income (if not included under any of the preceding heads), and the rest of the section deals with allowances. We have been referred to quite a number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness. Then Article 59 provides that two of the provisions in Article 63 which cause disqualification is in a director and the articles with regard to the rotation of directors shall not apply to Mr. Smith. Under the heading of Powers and Duties of Directors come Articles 64 and 65 which are as follows :- 64. The business of the company shall be managed by the Directors, who may exercise all such powers of the company as are not, by the Act, or any statutory modification thereof for the time being in force, or by these articles, required to be exercised by the company in General Meeting, subject nevertheless to any regulation of these articles, to the provisions of Act and to such regulation being not inconsistent with the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati Shankar. In that case the assessee was an Advocate appointed by the High Court as official liquidator of a company at a salary which was fixed by the High Court at five per cent. On the assets actually realised by him, and it was held the commission earned by the assessee could be taxed only under Section 7 of the Income-tax Act. Mr. Justice Din Mohammad delivering the judgment with which Mr. Justice Marten agreed said this :- From the two sections of the Companies Act referred to above, three things emerge quite clearly : (1) that an official liquidator holds an office; (2) that he is appointed by the Court; (3) that he is to receive either a salary or a remuneration, by way of percentage or otherwise, as the Court may dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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