Director remuneration is not automatically salary, so standard deduction under the Income-tax Act is unavailable.

Remuneration paid to a director of a private limited company is not treated as salary merely because the recipient holds office as director, since that position does not, by itself, create an employer-employee relationship with the company. On that principle, such remuneration cannot automatically qualify for standard deduction under section 16(i) of the Income-tax Act, 1961. The director's remuneration was therefore held not to be salary, and no deduction under section 16(i) was allowable.

---

---

Issues: Whether remuneration received by a director of a private limited company constitutes salary so as to entitle the director to standard deduction under section 16(i) of the Income-tax Act, 1961.

Analysis: The governing principle applied was that a director of a company is not, merely by reason of holding that office and receiving remuneration, in an employer-employee relationship with the company. On that basis, remuneration paid to a director cannot automatically be treated as salary for the purpose of claiming deduction under section 16 of the Income-tax Act, 1961.

Conclusion: The remuneration received by the director was not salary and no deduction under section 16(i) of the Income-tax Act, 1961 was allowable.

---