COMMISSIONER OF INCOME TAX Vs. NANAVATI S K

JUDGEMENT

(1.) IN this reference application under Section 256(1) of the INcome-tax Act, 1961 (hereinafter to be referred to as " the Act" ), relating to the assessment year 1973-74, the question of law referred by the Tribunal for seeking an opinion of this court is as follows :

(2.) THE facts may first be stated in short. THE assessee was a director of Tata Iron and Steel Company, Jamshedpur. He was appointed for a period of three years. According to the terms of the agreement, the assessee was to get a salary of Rs. 7,500 per month and a commission at the rate of \% on the net profits earned by the company subject to a ceiling of Rs. 45,000 per annum or half of the fixed salary whichever was less. Later on, the terms of appointment of the assessee were varied and the company, instead of paying commission, decided to purchase deferred annuity policies worth Rs. 45,000 from the Life Insurance Corporation of India, vide a resolution passed at the annual general meeting of the company held on August 22, 1972, which runs as under :

(3.) HAVING heard learned counsel for the parties, it cannot be disputed that the question which has fallen for our consideration in this case is squarely covered by our opinion rendered in the case of CIT v. J. G. Keshwani [1993] 202 ITR 391 (Taxation Cases Nos. 56 to 59 of 1980 decided on October 29, 1992). In the said judgment, we have examined in detail the corresponding provisions as appearing under the 1922 Act and the 1961 Act. In my opinion, the said judgment is conclusive so far as this court is concerned for the question involved.