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TMI Blog1972 (4) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... tance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion that, although the value of rent-free accommodation was asssesable in the hands of the assessee, yet it could be assessed under section 7 which is the provision for the assessment of tax on salaries. He reduced the quantum of assessment to Rs. 28,000. The assessee and the department both felt aggrieved with this order and went up in second appeal before the Income-tax Appellate Tribunal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 received by him in lieu of salary payable to him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and an employee." A director of a company holds an office under the company, but as a director he is not a servant or an employee of the company. But there may be special terms in the articles of association or there may be an independent contract which may bring about a contractual relationship between the company and the director and constitute the director an employee of the company. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the company. Unless such a relationship is established, section 7 has no application. We are satisfied that the Tribunal was right in its view. We accordingly answer the question in the affirmat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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