LADY NAVAJBAI TATA Vs. STATE

JUDGEMENT

(1.) THIS is a reference under Section 66 (1) of the Indian Income-tax Act and the question referred to us is : Whether in the circumstances of this case the remuneration of Rs. 40,000 received by the assessee from Messrs. Tata Sons Ltd. in the year of account is salary chargeable under Section 7 of the Indian Income-tax Act ?

(2.) THE assessment year was the year 1942-43, in respect of the accounting year, which is the calendar year 1941, in which year the sum of Us. 40,000 was received by the assessee in respect of her remuneration as a director of Tata Sons, Limited. This sum is made up of remuneration at the rate of Rs. 100 per month, and in addition, Rs. 38,800, being the assessee's share in the remuneration voted to the directors on May 5, 1941, at an annual general meeting of the company, pursuant to the power in that behalf contained in Article 97 of the company's articles. THE articles so far as material are as follows :

(3.) THIS article must be read in conjunction with Regulation 71 of Table A of the Indian Companies Act, which is a compulsory regulation and applies to all companies by virtue of Section 17 of that Act. Regulation 71 is in these terms : The business of the company shall be managed by the directors, who may pay all expenses incurred in getting up and registering the company, and may exercise all such powers of the company as are not by the Indian Companies Act, 1913, or any statutory modification thereof for the time being in force, or by these articles, required to be exercised by the company in general meeting, subject nevertheless to any regulation of these articles, to the provisions of the said Act, and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the company in general meeting; but no regulation made by the company in general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made.