Director remuneration under employment-linked resolutions is salary, not business income, absent an independent professional relationship.

Additional remuneration paid by a company to its directors under employment-linked resolutions was treated as salary because the payments formed part of their service arrangement and the company alone executed the contracts and bore the profit or loss. The resolutions did not show that the directors were acting as independent consultants or rendering separate professional or technical services. On those facts, the remuneration was taxable as salary and not as business or professional income.

---

---

Issues: Whether the additional remuneration received by the assesessees under the company resolution dated 20 June 1959 was taxable as salary or as income from business or profession.

Analysis: The remuneration under the first resolution was expressly described as salary, while the second resolution provided that the additional payment was in addition to the existing remuneration. The company itself executed the fresh contracts and bore the profit and loss from them, so the assessees had no independent profit-making venture in relation to those contracts. The resolutions did not establish that the additional payment was for independent professional services or technical advice rendered as outside consultants. The factual setting showed that the assessees had accepted employment with the company for attending to its works, and the authorities and precedents relied upon by the assessees did not alter that conclusion on these facts.

Conclusion: The additional remuneration was taxable as salary and not as income from business or profession, and the question was answered in favour of the Revenue and against the assessees.

Ratio Decidendi: Where remuneration is paid by a company to its directors under resolutions that form part of their employment arrangement, and the company alone executes the contracts and bears the attendant profit or loss, the payment is salary unless the assessee establishes a distinct independent business or professional relationship.

---