COMMISSIONER OF INCOME TAX Vs. DARSANRAM

JUDGEMENT

(1.) THIS is a reference under Section 66(1) of the Indian Income-tax Act asking the opinion of the Court upon the following question :-

(2.) IT is necessary to state the facts which have been found out of which the question of law arises. Two Hindu undivided families represented by Darsanram and Chatturam as their kartas owned a limited company known as Chatturam Horilram Limited. During the previous year a sum of Rs. 9,250 was paid to these two persons as directors fees. The contention of the assessee was that this was a lawful deduction in computing their profits for the assessment year. The department, on the other hand took, the view that the sum was received by these two persons by virtue of the family being the sole owners of the company and not because the individuals are working in the capacity of outsiders. The Appellate Assistant Commissioner pointed out in his order that if these sums were received from any other company then the case would have been different, but these are received from the private limited company owned by the two families, and, therefore, the sum received by them cannot be viewed in any other aspect than the income of the joint family.

(3.) FOR these reason I would answer the question in the negative.