COMMISSIONER OF INCOME TAX Vs. J JENKIN THOMAS

JUDGEMENT

(1.) THIS is a common reference relating to the assessment of three persons, viz., Messrs. J. J. Thomas, E. B. Lewis and R. Dow. On 9th May, 1957, the Neyveli Lignite Corporation entered into an agreement with Messrs. Powell Duffryn Technical Services Ltd. incorporated in U. K. doing the work of consultants. THIS company will hereafter be referred to for convenience as "P.D.T.S.". It had prepared a scheme for development of a lignite mine and a ground water control system at Neyveli. As from 10th May, 1957, it was employed by the Neyveli Lignite Corporation, hereinafter referred to as "N.L.C.", for a period of 3 years and 6 months. The term of employment of the consultants was liable to be extended for such further period and on such terms as might be agreed upon between the parties. P.D.T.S. had to appoint in consultation with and approval of N.L.C. from overseas and maintain at the mine, starting not later than three months from 10th May, 1957, the following among other staff, one directing engineer, one mechanical engineer and one mining engineer. The P.D.T.S. had to make available to N.L.C. as and when necessary the services of their whole Organisation in U.K. and had to arrange for additional engineer to visit India when necessary. In clause 8, it was provided that P.D.T.S. had to ensure that their staff at the mine was available when required to attend meetings with or convened by N.L.C. Under clause 9, N.L.C. had to take all necessary steps to ensure that its employees at the mine co-operated with the consultants and their staff to the extent necessary and to enable the consultants to carry out their duties. N.L.C. undertook under clause 11 to provide free of charge to the consultants, i.e., P. D. T. S. office accommodation at Neyveli and under clause 12, free residential accommodation, suitable for Europeans for each member of the site staff of the consultants, with basic furniture and free power for lights and fans and free supply of water.

(2.) THE site staff were to be given the necessary transport facilities as contemplated by clause 13. THE remuneration of the consultants was fixed under clause 14 on a consolidated fee of pound 200, 000 payable in quarterly instalments of pound 14, 250 each in Sterling in London as shown by clause 15. In clause 23(a) it was provided that the following officers, who are the assessees herein, were to be posted as site staff against the posts shown below, viz (1) Director Engineer : E. B. Lewis(2) Mechanical Engineer : J. J. Thomas(3) Mining Engineer and Surveyor : R. DowClause 23(b) stated that the individual salaries of the site staff were payable by N. L. C. notified in writing by P. D. T. S. before the arrival of the relative individual at the site and that the sum total of the rates per annum of the salaries of the nine members of the site staff as shown in clauses 6 and 23(a) was not to exceed pound 27, 500. THE salary was payable for the period actually spent on duty on the work of N. L. C. in India in Indian currency. THE staff was eligible for leave and the salary for the leave period was to be paid in Indian currency. THEn followed the following paragraph in clause 23(c)"Each member of the site staff shall be eligible for a subsistence allowance of Rs. 30 per day from the date on which furnished quarters are provided by the Corporation under clause 12 above and Rs. 45 per day until then, if he lives in accommodation found by the consultants themselves.

(3.) THE actress played the leading role in the said picture and it was successful beyond expectation. Ranganatha Das executed a document in her favour about 18 months after the release of the picture agreeing to pay her a fourth share of the realisations from the picture in consideration of her wholehearted help, co-operation and valuable services rendered by her and by way of special remuneration in addition to the fixed remuneration paid to her. She, accordingly, received two amounts, which were brought to tax for the assessment years 1952-53 and 1953-54. THE question before the court related to the taxability of these amounts. At page 351, after considering the several decisions cited before it, this court observed as follows"It has, therefore, to be seen whether, from the point of view of the assessee, the amount received accrued to him by virtue of his employment." *Earlier at page 349 the contention that the amount not having been received from the employer was not liable to be taxed in the hands of the assessee was noticed and it was observed as follows"...... the mere fact that a gift or payment was made by a person other than an employer will not be decisive of the question whether it was intended as a remuneration or present." *For this proposition, the learned judges have referred to the decision in Bridges v. Bearsley . In the said case it was decided by the Court of Appeal in U.K. that the assessee had served long and had expected some shares in the company to be transferred to him but the major shareholder had died without transferring the shares either inter vivos or by a will which the left.