1972 (4) TMI 27

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..... relationship is established, section 7 has no application
Judge(s) : R. L. GULATI., H. N. SETH. JUDGMENT The judgment of the court was delivered by GULATI J.-This is a reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax, U.P., Lucknow. The assessee is L. Lakshmipati Singhania, assessed as an individual. The assessment years are 1958-59 and 1959-60. During the previous years relevant to these assessment years, the assessee acted as a financial adviser to a limited company by the name of J. K. Jute Mills Ltd. He was previously a director of that company. He resigned from the directorship. Later on he was appointed by the company as financial adviser under a resolution of the bo .....

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..... Act, 1922, did not apply to the facts and circumstances of the case and in deleting the addition of Rs. 28,000 from each of the assessments made for the assessment years 1958-59 and 1959-60 ? " Section 7 of the Indian Income-tax Act, 1922, provides that the tax shall be payable by an assessee under the head " salaries " in respect of any salary or wages, any annuity, pension or gratuity, and any fees, commissions, perquisites or profits in lieu of or in addition to, any salary or wages, which are allowed to him by or are due to him. Now, in the instant case, the assessee was allowed no salary but only rent-free accommodation. Rent-free accommodation is undoubtedly a perquisite and it can be assessed as the assessee's income, if it is rece .....

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..... inancial adviser. Ordinarily, in the case of a master and servant, the servant works under the control of the master. The master can tell the servant what to do and how to do. Generally, a servant is not only a person who receives instructions from his master, but is also subject to the master's right to control the manner in which he carries out those instructions. Now, there is no finding in this case that the assessee was under the control of the company, while discharging his functions as the financial adviser. Indeed, what exactly were his functions is not known. It is, therefore, not possible from the resolution of the board itself to draw an inference that there existed the relationship of master and servant between the assessee and .....

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