COMMISSIONER OF INCOME TAX Vs. DURGA KUMAR NANDA

JUDGEMENT

(1.) ON an application being filed under Section 256(1) of the Income-tax Act, 1961, by the Department, the Tribunal has referred the following question for the opinion of this court :

(2.) THE assessee is a director in Durga Films Trade Private Limited. He received certain remuneration from the company. Treating that remuneration as salary, he claimed the standard deduction under Section 16(i) of the Income-tax Act. THE Income-tax Officer negatived the assessee's contention and assessed the same treating to be an income from other sources. THE assessee carried the matter in appeal and the appeal having been dismissed, the assessee preferred a second appeal before the Tribunal. THE Tribunal, however, came to the conclusion that the relationship between the director and the company is that of an employee and employer and, therefore, accepted the contention of the assessee and held that the remuneration received by the director would be salary and, therefore, the standard deduction as provided under Section 16(i) of the Act would be permissible. THE Department, however, having approached the Tribunal to refer the question of law arising therefrom, the learned Tribunal has referred the question as already stated.