| Case ID |
1612a576-042e-4bf1-beb9-4c2a08fd54a8 |
| Body |
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| Case Number |
TAX CASE No. 172 OF 1963 AND (REFERENCE No. 46 OF |
| Decision Date |
Nov 24, 1965 |
| Hearing Date |
|
| Decision |
The court held that the remuneration credited to the assessee for nine months represented his salary and was chargeable to tax under section 7 of the Income-tax Act, 1922. The resolution passed by the board of directors to stop the payment of remuneration was deemed to only withhold payment and did not alter the accrued right to salary. The appeal by the revenue was upheld, reversing the decision of the Appellate Assistant Commissioner. |
| Summary |
This case revolves around the taxation of salary received by K.R. Kothandaraman, the managing director of Transformer and Switchgear Limited, for the assessment year 1960-61. Kothandaraman was entitled to a monthly remuneration of Rs. 1,250 plus a commission based on profits. Despite the company not making profits, the court ruled that the salary accrued monthly was taxable under the Income-tax Act. The court clarified that the board's resolution to stop payment did not negate the right to receive salary that had already accrued. This case highlights the importance of contractual agreements in determining tax liabilities and the implications of corporate resolutions on remuneration. |
| Court |
Madras High Court
|
| Entities Involved |
Transformer and Switchgear Limited
|
| Judges |
Veeraswami, J.,
Kunhamed Kutti, J.
|
| Lawyers |
K. Srinivasan,
V. Balasubrahmanyan
|
| Petitioners |
K.R. Kothandaraman
|
| Respondents |
Commissioner of INCOME TAX
|
| Citations |
1966 SLD 306 = (1966) 62 ITR 348
|
| Other Citations |
CIT v. Lady Navajbai R.J. Tata [1947] 15 ITR 8 (Bom.),
CIT v. B. Nagi Reddy [1964] 51 ITR 178 (Mad.),
CIT v. L.W. Russel [1964] 53 ITR 91 (SC),
CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (SC),
CIT v. K.R.M.T.T. Thiagaraja Chetty & Co. Ltd. [1953] 24 ITR 525 (SC),
Inderchand Hari Ram v. CIT [1952] 22 ITR 108 (All.),
H.M Kashiparekh & Co. Ltd. v. CIT [1960] 39 ITR 706 (Bom.),
Kothari Mehta & Co. (P.) Ltd. v. CIT [1963] 50 ITR 753 (Mad.),
Lakshminarayan Ram Gopal & Son Ltd. v. Government of Hyderabad [1954] 25 ITR 449 (SC)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
15,
7
|