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Commissioner Of Income-Tax vs Ramakrishna Mills (Coimbatore) Ltd. on 19 December, 1972 cites

Ramabe, A. Thanawala vs Jyoti Limited on 1 January, 1800

In this connection, the learned counsel for the revenue relies on the decision of the Bombay High Court in Ramaben A. Thanawala v. Jyoti Ltd., [1957] 27 Comp. Cas. 105, 111 (Bom.). In that case the scope of Sections 198, 309 and 348 came up for consideration. Chagla C.J., speaking for the Bench, held that Section 309 of the Companies Act deals with and controls remuneration paid-to a director in his capacity as a director and in no other capacity, that a director, in addition to the receipt of remuneration as a director, may also receive remuneration in a different capacity such as a technical adviser, and that the remuneration received by him in such a technical capacity should not be taken into account in deciding whether the amount paid to him exceeded the limit prescribed in that section. As regards Section 198 the learned Chief Justice said that what is sought to be controlled by that section is the cost of management and that, therefore, the remuneration paid for any other purpose to a director in his capacity as a technical expert is not to be taken into consideration for the purpose of limiting the overall maximum managerial remuneration to 11 per cent. of the net profits mentioned in Section 198. But as regards the scope of Section 348 it was held in that case that as the section is clear and emphatic that a managing agent cannot receive more than 10 per cent. of the net profits of the company either in his capacity as managing agent or in any other capacity and that the remuneration which a partner of a managing agency firm receives from the company managed by it, as a technical expert, has to be taken into account for the purpose of limiting the remuneration of the managing agency firm to 10 per cent. as per the section. The basis of the said decision is that a partner of a managing agency firm is himself a managing agent and, therefore, the remuneration received by him for services rendered to the company in his individual capacity should also be treated as a remuneration to the managing agency firm. The relevant observations therein are these:
Bombay High Court Cites 18 - Cited by 12 - Full Document
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