MALIK, J. - (1.) IN this reference under Section 66 (1) Income -tax Act, the question referred to us is as follows: 'Whether in the circumstances of this case the assessee's remuneration was rightly assessed under the head 'salaries' within the meaning of Section 7, Income -tax Act, and not as income, profits and gains of business.'
(2.) THE assesses is the Managing Agent of the U. P. Glass Works Limited. His remuneration was fixed at 15 per cent, of the net profits or a monthly pay of Rs. 1,000/ - whichever he would elect at the end of each year. The duties and powers of the assessee -respondent as Managing Agent are enumerated in Article 17 of the Articles of Association, which is printed at page 12 of the Statement of the Case. The Managing Agent under the said Article is given the right to manage the businessof the company and to do all that may be necessary in connection with that business. In the yearof account the assessee elected to receive his remuneration at 15 per cent, of the net profits. The Income -tax Officer treated this remuneration as business profits, while the case of the assessee is that the remuneration received by him is salary and he is the servant of the company. The Appellate Assistant Commissioner affirmed the Income -tax Officer's decision and held that the amount received by the assessee as commission was business profits. On appeal the Appellate Tribunal held that it was salary and not business income. The Commissioner of Income -tax then applied that a case be referred to this Court for decision whether the amount received by the assessee as Managing Agency commission was income from salary or profits and gains of business.
(3.) WE have said in several cases that the question, whether a particular income is income from business or salary, must be decided in view of the facts and circumstances of each case. The circumstance relied on behalf of the Commissioner of Income -tax is that Articles 9 and 10 of the Articles of the Association provide that the assessee shall hold office unless and until he voluntarily resigns or is removed by an extraordinary resolution passed at a general meeting etc. and that he shall have a right to nominate a successor. In the Statement of the case it is mentioned that as early as 1923 the Managing Agent had renounced his rights and privileges under Articles 9 and 10 of the Articles of Association, On behalf of the Commissioner it was further relied upon that the assessee was not a whole time employee of the U. P. Glass Works Ltd. and he could not, therefore, be said to be a servant.;