MALIK,.J. - (1.) IN this reference under s. 66(1) of the Indian IT 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 s. 7 of the IT Act, and not as income, profits and gains of business -
(2.) THE assessee 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 Art. 17 of the articles of association, which is printed at page 12 of the statement of case. The managing agent under the said article is given the right to manage the business of the company and to do all that may be necessary in connection with that business. In the year of account the assessee elected to receive his remuneration at 15 per cent of the net profits. The ITO 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.
(3.) THE AAC affirmed the ITO's decision and held that the amount received by the assessee as commission was business profits. On appeal the Tribunal held that it was salary and not business income. The CIT 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. 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 circumstances relied on on behalf of the CIT is that Arts. 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 Arts. 9 and 10 of the articles of association. On behalf of the CIT 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.;