LAWS(ALL)-1975-5-31

PRATAP VEER KAKKAR Vs. COMMISSIONER OF INCOME TAX

Decided On May 02, 1975
PRATAP VEER KAKKAR Appellant
V/S
COMMISSIONER OF INCOME-TAX Respondents

JUDGEMENT

(1.) THE following question of law, based on identical set of facts, has been referred to this court for opinion in the above noted references :

(2.) THE assessees are brothers and along with their father constituted a Hindu joint family. This joint family carried on business in the name and style of Kohinoor General Industries up to the assessment year 1959-60. Later, there was a partial partition in the family when the joint family business was converted into a partnership firm consisting of the two brothers and their father as partners. In July, 1961, a private limited company was formed in the name and style of M/s. Ghaziabad General Industries (P.) Ltd., which took over the business run by the partnership firm. THE assessees and their father were appointed as lifetime directors of the company. Article 15 of the Articles of association provides that if any director is willing he may be called upon to perform extra services for the business of the company and may be remunerated for such services. THE assessees agreed to render extra services and for the assessment year 1962-63, a remuneration of Rs. 5,400 was paid to each one of them. THE assessees claimed that the remuneration so received by them was for personal exertion by rendering extra services to the company and, therefore, constituted their personal income and should be so assessed.

(3.) THE Tribunal has submitted a supplementary statement of the case. It referred to a letter of the assessec (P. V. Kakkar) dated February 22, 1967, addressed to the Income-tax Officer as the only relevant material on record. In the letter it was asserted that the assessee had good experience in the line of business carried on by the company and was actively engaged in the daily conduct and working of the company and that the holding of shares had nothing to do with his earning from the company as salary. THE Tribunal, on an interpretation of its earlier order, took the view that the Tribunal may be said to have found it as a fact that some services were rendered by the assessee to the company. THEre is no finding with regard to the nature and extent of services rendered by the assessees to the company, namely, as to whether the services rendered were of such a nature as depended on the personal qualification of the assessees. THE Tribunal may be said to have recorded a finding that the assessees rendered some service of a general nature.