TRAILOKYANATH MOHANTY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE are three references made under Section 256(2) of the Income-tax Act of 1961 by the Income-tax Appellate Tribunal, Cuttack Bench, and the following common question has been referred to us for our opinion :

(2.) THE relevant years of assessment are 1968-69, 1969-70 and 1970-71, the respective previous years having ended with 31st of March of the corresponding years. Assessee was the managing director of M/s. Orient Engineering Works Private Ltd. and was assessed to income-tax in the status of an individual. In his return the assessee had not included any salary income qua managing director. THE Income-tax Officer found that provision had been made by the company for such remuneration being Rs. 15,000 for the first year and Rs. 12,000 for each of the two subsequent years. When the Income-tax Officer proceeded to include these sums in the respective assessment years as income, the assessee contended that though provision had been made for it, the amounts had not been paid nor were payable to him in view of the fact that the board of directors had resolved not to permit any payment on account of continuous loss sustained by the company. THE Income-tax Officer overruled the stand of the assessee and brought the amount into the net of taxation. Assessee's appeals before the Appellate Assistant Commissioner were dismissed and the Tribunal also upheld the taxability of the amounts. Assessee asked for a statement of the case to this court and that having been rejected moved this court for a direction to the Appellate Tribunal to state a case in each of these years. This court ultimately directed the Tribunal to state a case and refer the question already indicated.