9911796707
TMI Blog1997 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ax, dated January 12, 1990, passed in S.R.M.P. No. 4 of 1988. The assessment year involved is 1984-85. The Commissioner of Agricultural Income-tax disallowed the commission paid to the managing director of the company and other directors on the ground that the directors including the managing director were shareholders and they are entitled to share equally the profit and loss. In this view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission paid to the managing director and other directors are not allow able in the computation of the agricultural income of the assessee as the com mission paid to them would really partake of the character of the non-agricultural expenses. We have carefully considered the submissions of learned counsel for the assessee and the learned Government Advocate. It is not disputed that the commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r quarterly, and it can also be paid on the basis of the work done by the director. Whatever may be the measure for the payment of money to the director for the work done, the commission paid to the director by the company would really partake of the character of the salary though it is styled as a commission. Viewed in that light, the commission paid to the managing director as well as the dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to share the profit and they will be entitled to receive dividends on the declaration of the dividends in a general body meeting of the company. It is not disputed that the directors did render any service to the company and therefore it cannot be held that the payments were made on certain extra commercial consideration or the payments made were not commensurate with the services rendered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the earlier order of this court that the expenses incurred by way of commission to the managing director and other directors is deductible in the computation of the agricultural income of the assessee as it is within the limit prescribed by the law and it is a permissible deduction. Accordingly, we set aside the order of the Commissioner of Agricultural Income-tax in S.M.R.P. No. 4 of 1988, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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