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TMI Blog1992 (4) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... cases are all directors of Messrs. Kapoor Motor Engineering Private Ltd., a company registered under the Companies Act, 1956. The different cases involve a common question of law, though they pertain to different assessment years and to different assessees. These references have, therefore, been heard analogously and are being disposed of by this common judgment. For the relevant years, the assessees were all assessed as individuals and they claimed their remuneration as " salaries " and claimed standard deduction thereon under section 16(i) of the Income-tax Act, 1961 ( for short, " the Act " ). The assessing authority, namely, the Income-tax Officer, did not accept the contention of the assessees that the remuneration received by them wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been in their option between the present concern and the company, where he is a director or managing director. According to Mr. Ray, in the present batch of cases, the assessees have failed to establish the master and servant relationship, and as such their claim for deduction has justifiably been disallowed by the Income-tax Officer. On the other hand, Mr. Paikray, learned counsel for the assessees, has put emphasis on the fact that the memorandum of association adopted by the company in its different articles proved that a director may be called upon to perform extra services for the company and, in such an event, the company would remunerate such director. He has put emphasis on article 57 which is extracted hereunder : " If any dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a proper appreciation. "It was resolved that the duties generally shall be assigned for the management of the company subject to the control and supervision of the board be and are hereby assigned to the several directors as shown against each and the same be allotted as modified at any later date." Names of directors Specific duties and function assigned 1. Sri Rajendra Kapoor Sales and liaisoning 2. Smt. Santi Devi Look after Ravindra Auto Engineers and purchases 3. Sri Jogender Kapoor Supervision of workshop and spares section 4. Smt. Ritu Kapoor Assisting the managing director generally 5. Smt. Kiran Kapoor Supervision of accounts. (Sd.) Rajendra Kapoor, (Sd.) Ritu Kapoor, (Sd.) Jogender Kapoor, (Sd.) Kishanl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a company enjoys a dual capacity. He might be a director as well as an employee, but that he is an employee must not be merely on paper, rather it should be proved and established on record as a fact. In the present case, the articles of association are contrary/contradictory to the proposition of dismissal of a director. The resolution speaks of allotment of work and leaves the matter merely to be inferred. No attempt was made to prove this fact on record. In what manner they really render extra services to the company as was expected and required of them in the resolution remained only on paper. Merely because there has been a resolution by the board of directors where directors are ultimately remunerated in the meeting Of the board do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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