Director's continuance payment treated as taxable office remuneration despite being structured as consideration for not resigning.

A payment made to secure a director's continuance in office was held to be a profit arising from that office and taxable under Schedule E. The charging words covered salaries, fees, wages, perquisites and profits from an office, and the deed, letter and board resolution showed a bargain for continued service in an advisory capacity rather than a mere payment for refraining from resignation. Its lump-sum form did not change its character as remuneration referable to the directorship, so the assessment was restored and the taxpayer obtained no relief.

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Issues: Whether the sum of 45,000 paid to a director in consideration of his not resigning and continuing to serve was a profit arising from his office and taxable under Schedule E.

Analysis: The charging words of Schedule E and Rule 1 covered all salaries, fees, wages, perquisites or profits from an office of profit. The deed and accompanying letter showed that the payment was made to secure the director's continuance in office, and the contemporaneous board resolution confirmed that he was to remain in an advisory capacity at a fixed annual remuneration. On their proper construction, the documents disclosed a bargain for continued service, not a mere payment for refraining from serving a notice of resignation. The sum was therefore remuneration referable to the office, and its lump-sum character did not alter its income nature.

Conclusion: The 45,000 was taxable as a profit arising from the appellant's office of director, and the appeal failed.

Final Conclusion: The payment was held to be assessable income derived from the directorship, so the assessment was restored and the taxpayer obtained no relief.

Ratio Decidendi: A payment made to secure a director's continuance in office, even if expressed as consideration for not resigning and paid as a lump sum, is a profit from the office and falls within the charging provisions for emoluments of that office.

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