SHIV PRAKASH SETH Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE assessce is a director of M/s. Seth Oil Mills Private Ltd. During the accounting year April 1, 1967, to March 31, 1968, be did not draw any remuneration from the company though he was entit-led to remuneration at the rate of Rs. 2,000 per month. On June 20, 1968, the company passed the following resolution :

(2.) THIS resolution of the company was effective from January 1, 1968, in regard to two other directors of the company, Shri Janak Raj Seth and Shri Ramesh Seth. The Income-tax Officer took the view that in the case of Shri Shiv Prakash Seth also, it became effective from January 1, 1968. The Income-tax Officer was of the view that the remuneration payable to Shri Shiv Prakash Seth did accrue to him and, therefore, whether he had drawn the remuneration or not, such remuneration had to be included in his income. A further argument that he had given up the remuneration was overruled by the Income-tax Officer on the ground that such giving up was not at any time during the relevant accounting year. The order of assessment made by the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. The following question has been referred to us for our opinion :

(3.) THE learned counsel for the assessee then urged that the remuneration payable to a director is not salary and, therefore, it could not be taxed on an accrual basis. The question referred to us is not whether the revenue was not right in treating the remuneration as salary. In fact, throughout it was assumed before all the subordinate tribunals that the remuneration due to the assessee was salary and was taxable as such. The question whether remuneration paid to a director is or is not salary is not an abstract question of law which could be answered. It depends on various circumstances such as the nature of the duties performed by the director of the company, the nature of the agreement, if any, between the individual director and the company, etc. We are of the view that the question whether the remuneration payable to the assessee is not salary does not arise out of the question referred to us. The question referred to us is answered in the affirmative.