RAM PERSHAD vs COMMISSIONER OF INCOME-TAX, NEW DELHI

The Supreme Court held that the remuneration of a managing director, including commission, is taxable as 'salary' under Section 7 of the Indian Income-tax Act, 1922. The Court emphasized that the managing director operates within the terms of the articles of association and under the control of the Board of Directors, indicating an employment relationship. The judgment clarified that the distinction between a servant and an agent depends on the specific duties and the nature of the employment as outlined in the articles of association.