COMMISSIONER OF INCOME TAX Vs. GIAN SINGH KALSI

JUDGEMENT

(1.) THESE two references pertain to the assessment of Gian Singh Kalsi, an individual, for asst. yrs. 1961 -62 and 1962 -63. They have been moved by the CIT in the following circumstances:

(2.) THE assessee was the managing director of the Kalsi Tyre Retreading Factory (P) Ltd. (hereinafter referred to as "the company"), during the relevant years, having been appointed so by the board of directors on 25th Aug., 1960. This resolution was to the following effect :

(3.) THE ITO, however, treated the amounts of those salary incomes as part of the assessee's assessable incomes. Their surrender later to the company, it was held, could not obliterate the accrual and receipt earlier by the assessee of those amounts during the relevant years. These decisions were upheld in the appeals by the AAC. He observed that in the accounts of both the company and the assessee, the payments of the salary amounts had been duly contemporaneously recorded. These circumstances, he observed, showed that it could not be that the other directors of the company were unaware of the salary amounts drawn by the assessee or they were not approving those withdrawals. Furthermore, when the assessee was utilising the salary amounts for meeting his personal and household expenses, it was assumed that the family members must have known that the assessee was enjoying those salary amounts. The assessee's own conduct also abundantly made it clear that he owned the salary incomes as belonging to him and disclosed them in the two returns which were initially filed. Any surrender of those amounts subsequently long after the previous years, it was held, could not eliminate the accrual and enjoyment of the salaries by the assessee. This belated surrender was considered to be more as a sort of an advantage in the matter of the income -tax assessment so far as the company was concerned, inasmuch as it was having taxable income in those years.