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TMI Blog1961 (9) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to Income Tax. This income included the remuneration which the petitioner received for carrying on the business of the private limited company, namely, The Byramji Mining Combine Limited . The case for the assessment of the Byramji Mining Combine Limited, which would hereinafter be referred to as the company, was also taken up for consideration. The company had shown a sum of ₹ 39,487 on account of remuneration and bonus paid to the petitioner as an item of expenditure. The assessing officer, however, refused to deduct the whole of this amount from the assessable income of the petitioner on the ground that the business of the company did not have any use of the petitioner's engineering skill and experience. The Income Tax Officer, however, allowed half the amount, that is, ₹ 19,743-8-0, as reasonable deduction. Therefore, the petitioner made an application to the Income Tax Commissioner on July 25, 1953, under section 33A of the Income Tax Act, 1922, for a revision of the order passed in his personal case on January 10, 1952. He contended that the remuneration paid to him came out of the profits of the company and, therefore, that was exempt from assessment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed in the other case. 2. In both these petitions, the petitioner has prayed for the issue of a writ of certiorari and also of mandamus. So far as the prayer for the issue of a writ of mandamus is concerned. Mr. Padhye explained that that writ can be issued in respect of the process for recovery of Income Tax. We are unable to understand how such a writ can be issued so long as the order of the Income Tax Officer stands as it is. The petitioner had referred to article 265 of the Constitution of India in his petition and contended that this was a case of tax being levied without any legal authority for the same. Article 265 applies to a case where the tax is being levied or collected without lawful authority in that respect. Article 265 runs thus : No tax shall be levied or collected except by authority of law. 3. The tax that has been levied and will be recovered from the petitioner does not fall within the mischief of this article because the assessment order has been passed by the Income Tax Officer and the collection will proceed on the authority of that order. Unless the order passed by the Income Tax Officer and confirmed by the Commissioner in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made by the petitioner is that the Commissioner's order does not refer to the two important documents that were produced by the petitioner after the case was remanded to him for consideration by the High Court. Mr. Padhye complained that the Commissioner has reproduced the extracts from the order of the Income Tax Officer passed in the assessment case of the company and has held that it was clear from the said extracts that the remuneration was not paid by the company to the assessee out of its profits nor had his remuneration been determined with reference to the profits of the business. According to Mr. Padhye, it was the duty of the Commissioner to have applied his mind to the question independently of the order passed in the company's case and to come to his own conclusions as to whether the remuneration paid to the petitioner was or was not a part of the profits of the company and came out of other sources of its own such as income. According to Mr. Padhye, there is, therefore, an error apparent on the face of the record and, since this is a speaking order, it deserves to be set aside. Before considering this line of reasoning, it is necessary to consider the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged under the head business . It is evident from the language employed and particularly the use of the conjunctive and that the two conditions are cumulative and both of them must be satisfied before any exemption can be claimed on the basis of this notification. The Income Tax Commissioner had held two out of what he called the three conditions as satisfied, relying on certain observations made by the Patna High Court in Hasan Sasamusa v. Commissioner of Income Tax. The facts of that case were more or less similar, but there is no discussion in the judgment as to why their Lordship held that the third condition preceded by the word and was satisfied in that case. It is clear from the order passed by the Income Tax Officer in the assessment case of the company that a deduction on account of the remuneration paid to the petitioner was reduced on the ground that the remuneration claimed by him was excessive and out of proportion to the duties performed by him so far as the affairs of the company were concerned. The deduction in that case was not disallowed nor reduced on the ground that the salaries were paid out of the profits or were determined with reference to the profits o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is that the conditions as to remuneration shall be such as are mutually agreed upon between the said managing director and other directors. This only means that the post of a managing director did not carry a fixed remuneration and the remuneration was fluctuating and was liable to be fixed by mutual agreement between the parties. As has been rightly pointed out, the company comprised only two members, the petitioner and his wife. The amount of remuneration, therefore, could be anything agreed upon between the husband and the wife. Whatever that may be, we are unable to understand how either of these two documents supports the petitioner's contention that the remuneration came out of the profits of the Company. Ordinarily, the remuneration comes out of the income of the company and unless there is a special stipulation for the remuneration being paid or coming out of the source of the profits of the company, the presumption will be that the remuneration is paid out of the regular income of the company. Although, therefore, the Commissioner has not specially referred to these two documents, still we do not think that his decision would have been in any way different even if he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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