Master Servant Relationship May Exist Between Director Cum Major Shareholder & The Company

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Master servant relationship is most fundamental basis for treating a payment to a person by the employer as his salary. If the master servant relationship is lacking , any payment made to any person for a service can not be regarded as salary under Income Tax Act. Thus , in case where a person is major shareholder of the company , the existence of master servant relationship between him and the company in which he has major shareholding is a controversial issue. In other words ,whether a shareholder cum director can be employee of the company ?

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