PANNALAL KOTHARI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE abovementioned four references relate to the assessment years 1962-63, 1963-64, 1965-66 and 1966-67, respectively. As identical questions of law arise in all the four cases, the same are disposed of by one single order.

(2.) BRIEFLY stated, the facts of the case as mentioned in the statement of the case are that Shri Pannalal Kothari, hereinafter referred to as "the assesses", was working as the managing director of M/s. Mahalaxmi Cotton Mills, Beawar (hereinafter referred to as "the company"), during the relevant assessment years. He was appointed as managing director of the company by an agreement on May 7, 1960, for a period of five years, vide the resolutions of the board of directors of the said company. It was resolved in the resolutions that "the company should engage and employ Shri Pannalal Kothari as managing director who should serve the said company on the said terms and conditions herein set forth......"

(3.) WITH effect from 1960, on account of certain changes in the Companies Act, the managing agency system was to be abolished. The company had to fall in line with the proposed change in law. The company, therefore, abolished the managing agency and appointed instead Shri Lalchand as the first managing director of the company in July, 1959. Shri Lalchand Worked as managing director of the company for a brief period from July, 1959, to December 24, 1959, on which date he died. After his death, Pannalal, the present assessee, was appointed as managing director.