JAGANNATHA SHETTY, J. ( 1 ) THE petitioners ate directors of Companies registered under the Companies act, 1956. They challenge the validity of the " Profession tax " levied on them under the Karnataka Tax on Professions, Trades, Callings and Employments act, 1976 (Kar. Act No. 35 of 1976) which we will hereinafter refer to as "the Act". ( 2 ) THE Act is to provide for the levy and collection of tax on professions, trades, callings and employments in the State of Karnataka. The Act by S. 3 charges every person who exercises any profession or calling or is engaged in any trade or holds any appointment, public or private, or is employed in any manner in the State, specified in the second column of the Schedule, to pay taxes at the rate mentioned in the corresponding entry in the third column of the said schedule. ( 3 ) AS per the said entry, the petitioners being the Directors, are liable to pay and were also called upon to pay Rs. 250 per annum as profession tax. ( 4 ) A few more facts may require recapitulation for purposes of properly apprehending the tr. e scope of the controversy: The Company of which the petitioners in W. P. No. 4600 of 1978 are directors, is called "balanoor Tea and rubber Company Ltd. " It is having its registered Office in the State of karnataka. But all the petitioners reside outside the State. As per the Articles of association of the Company, the Directors are paid sitting fees of Rs. 250 whenever they attend a meeting of the Board of Directors. ( 5 ) THE petitioners in W. P. No. 10084 of 1977 are directors of a Company called, "bellary Brucepettah Hindu Mutual Benefit Permanent Fund Ltd. " the registered office of the company is in the State of Karnataka and the petitioners are also permanent residents in the State. They get a nominal sum of rs. 6 as sitting fees if they attend a board meeting which ordinarily meets four or five times in a year. Each one of them has been called upon to pay the profession tax of Rs. 250 per annum. It may also be relevant to state that these petitioners are not employed in any manner by the Company. 6 as sitting fees if they attend a board meeting which ordinarily meets four or five times in a year. Each one of them has been called upon to pay the profession tax of Rs. 250 per annum. It may also be relevant to state that these petitioners are not employed in any manner by the Company. ( 6 ) THE primary contention urged for the petitioners is that they as directors are not exercising any profession, calling or are engaged in any trade or hold any appointment, public or private in the State of Karnataka, and the entry 6 by which they are made liable to pay the profession tax is therefore illegal and beyond the scope of the Act. This contention must, necessarily be examined having regard to the scope of the Act and sweep of the legislative entry. The basic requirement for the levy of tax under the Act is that one must be engaged in some profession, trade, calling or employment in the State. The relevant entry in the legislative lists conferring taxing power on the State under which alone the impugned levy could be supported is Entry 60 in the State List in the seventh Schedule of the Constitution. It reads : " 60, Taxes on Professions, trades, callings and employments. " the taxes specified in the above Entry as stated by the Supreme Court in Rajagopalacliari v. Corporal ion of Madras, A. I. R. 1964 S. C. 1172 at 1178 are taxes on the carrying on a profession, trade, calling and employment, and that therefore, the tax under the Act could be imposed if a person in fact carries on a profession etc. Art, 276 while prescribing a limitation on this power to tax further confirms this view. ( 7 ) THE Act does not define the words "profession, trade or calling". In the absence of any such definition, we may look into the dictionary meaning. The word "profession" is described in Jowitt's-Dictionary of English Law, 2nd edn. Vol. 2 at page 1442 as follows; "calling vocation, known employment. " it thus appears to be wide in its conception, The meaning of the word "calling" as given by Webster's - unabridged (New) Twentieth Century dictionary, page 257 is : "a vocation, profession, trade or occupation. " it is again very wide ; and means practically to include one's usual occupation, vocation, business or trade. " it thus appears to be wide in its conception, The meaning of the word "calling" as given by Webster's - unabridged (New) Twentieth Century dictionary, page 257 is : "a vocation, profession, trade or occupation. " it is again very wide ; and means practically to include one's usual occupation, vocation, business or trade. Similarly is the conception of " Trade " as explained by the Supreme Court in State of Bombay v. The Hospital Mazdoor sabha, A. I. R. 1960 S. C. 610 at 613, para 8. It was observed : " ' trade ' according to Halsbury, in its primary meaning is "exchange of goods for goods or goods for money', and in its secondaiy meaning it is "any business carried on with a view to profit whether manual or mercantile, as distinguished from the liberal arts or learned professions and from agriculture. " with these words of wide import, we may now consider whether the petitioners as Directors of Companies are exercising any profession, calling or are engaged in any trade or hold any appointment. ( 8 ) AS a preliminary to the consideration of this question, it would be necessary to advert to the relevant provisions in the Companies Act, 1956. S. 2 (6) defines "board of Directors" or "board" to mean "the Board of directors of the Company ". S. 2 (13) defines " Director" to include "any person occupying the position of director by whatever name called", S. 252 provides that every public company shall have atleast three directors. S. 285 states that a meeting of the Board of directors of every Company shall be held atleast once in every three months and atleast four such meetings shall be held in every year. S. 309 provides for remuneration payable to directors including any Managing or wholetime director. That payment shall be determined in accordance with and subject to the provisions of section either by the Articles of the Company or by a resolution passed by the Company in general meeting. Sub-section (2) of S. 309 states that a director may receive remuneration by way of a fee for each meeting of the Board or a committee thereof attended by him. It is seen from these provisions that the directors of a company are not its employees. Sub-section (2) of S. 309 states that a director may receive remuneration by way of a fee for each meeting of the Board or a committee thereof attended by him. It is seen from these provisions that the directors of a company are not its employees. There can be little doubt on this proposition if we read the following passage from Palmer's Company Law, Palmer's Company Law, 22nd Edn. Vol. I pages 625-626. " Directors are not, as such, employees of the Company or employed. by the company, nor are they servants of the company, or members of its staff. . . . . . . . A director can, however, hold a salaried employment or an office in addition to that of his directorship which may, for these purposes, make him an employee or servant, and in such a case he would enjoy any rights given to employees as such : but his directorship and his rights through that directorship are quite separate from his right as employee. " ( 9 ) IF they are not employees of the Company, what else is their position ? they were once regarded as trustees by the Courts of Equity, but that description seems to-day to be strictly not correct. In the words of Romer, J. in Re. City equitable Fire Insurance Co. , (1925) Ch. 407 at 426. " It has sometimes been said that directors are trustees. If this means no more than that directors in the performance of their duties stand in a fiduciary relationship to the company the statement is true enough. But if the statement is meant to be an indication by way of analogy of what those duties are, it appears to me to be wholly misleading. I can see but little resemblance between the duties of a director and the duties of a trustee of a will or of a marriage settlement. " ( 10 ) IF they arc not trustees, are they then agents ? Cairns, L. J. in Ferguson v. Wilson, (1866) L. R. 2 Ch 77 at 89. said :"what is the position of directors of a public company ? They are merely agents of a company. " ( 10 ) IF they arc not trustees, are they then agents ? Cairns, L. J. in Ferguson v. Wilson, (1866) L. R. 2 Ch 77 at 89. said :"what is the position of directors of a public company ? They are merely agents of a company. The company itself cannot act in its own person, for it has no person ; it can only act through directors, and the case is, as regards, those directors, merely the ordinary case of principal and agent. Wherever an agent is liable those directors would be liable: where the liability would attach to the principal, and the principal only, the rliability is, the liability of the Company,"but according to Lord Selborne, the directors have dual characters; In G. E, Ry. v. Turner, (1872) L. R. 8 Ch. 149 at 152. he said :"the directors are the mere trustees or. agents of the company trustees of the company's money and property-agents in the transactions which they enter into on behalf of the company. " ( 11 ) THE real position of directors has been neatly summarised by L. C. B. Gower in his book ' the Principles of Modern Company Law. ' The learned author states, Principles of Modern Company Law, 3rd End. page 549. "duties of Care and Skill.-This subject can be disposed of briefly, for there is a striking contrast between the directors' heavy duties of loyalty and good faith and their very light obligations of skill and diligence. Directors have to display some degree of both, but the Courts have found difficulty in deciding how much. Here, as already pointed out, the trustee analogy breaks down, for the type of skill required of a cautious trustee is quite different from that which an enterprising director needs to display. The courts might no doubt, have demanded of directors a degree of, diligence comparable to that of trustees a high degree particularly where they are paid. But the Courts cannot be too far in advance of public opinion, and public opinion has come to recognise that directorships are often little more than sinecures, requiring at the most, attendance at occasional board meetings" it is obvious from these propositions that no clear cut character role-sould be assigned to an ordinary, director of a company. He is not required to give continuous attention to the affairs of the Company. He is not required to give continuous attention to the affairs of the Company. His duties are of an intermittent nature to be performed at periodical beard meetings and, at meetings of any committee of the board upon which the happens to be placed. He is however, not bound to attend all such meetings and he who stays away runs the risk of being not appointed when he next comes up for re-election. By the nature of duties enjoined, by the Companies Act, he cannot certainly be said to be engaged in any profession or callings. Neither he does any busiaesss. It is the company that, carries on business, ( 12 ) FOR confirmation of our view, we may refer to the Income Tax Act, 1961, S. 14 of the said Act sets out heads of income for the purpose of charge of income tax and computation of total income. They include, among other items, salaries, profits and gains of business or. profession and income from other sources. S. 28 deals with profits and gains of business or profession and it states that that income shall be chargeable to income tax in accordance with the principles stated therein. S. 56, deals with income from other sources and it shall be chargeable to income tax under that head if it is not chargeable to income tax under any of the heads specified in S. 14. Dealing with the scope of the analogous provisions in the Indian Income, Tax Act (XI of 1922), Leonard Stone, C. J. of the Bombay High Court in Commissioner of Income Tax, Bombay City v. Lady navajbai R. J. Tata, (1947) 15 ITR. 8 observed that the payment made to an assessee who was a permanent director in,a limited company for the services rendered, was neither a salary nor wages and it did not fall to be taxed under S. 7, but must be brought to iax as income from other sources under S. 12. It thus becomes clear that the fees paid to a director cannot be considered as profits or gains of business or profession or to be regarded as salaries. It could be taxed only as income from other sources falling under the residuary head in the absence of specific terms in the articles of association or an independent contract of employment. It thus becomes clear that the fees paid to a director cannot be considered as profits or gains of business or profession or to be regarded as salaries. It could be taxed only as income from other sources falling under the residuary head in the absence of specific terms in the articles of association or an independent contract of employment. This again presupposes that the directors are not exercising any profession or calling or are engaged in any trade or hold any appointment. Entry 6 of the Schedule which makes them liable on these counts must therefore, be struck down as it is beyond the scope of charging S. 3. ( 13 ) THIS takes us to the second contention urged for the petitioners. It relates to the discrimination by the unreasonable classification made by Entry 6 whereunder the directors of companies nominated by Government are exempted from payment of tax. It was urged that directors as a class whether nominated by Government or appointed, by the Company fall into one class so far as, their functions and powers are concerned, and here is therefore no basis for not exempting the petitioners from the liability to pay the tax. Mr. , Brahmarayappa, learned High Court Government Advocate, however, urged that the directors nominated by the Government are usually Government servants and are only interested in safeguarding the Government investment in the Company and their exclusion under the Act is therefore reasonable. We do not think that that contention is right. It proceeds on a misconception. The directors nominated by the government need not necessarily be Government servants. More often private persons are also nominated by Government as directors. Apart from that, it would be wrong to state that the duty of the Government nominees is limited only to look after the interest of the Government investments. The Government investment is not safe unless the overall performance of the Company is on a sound footing. He who looks at the narrow view and without a foresight on the company's performance cannot safeguard the Government's investment. ( 14 ) MR. V. Krishnamurthy, learned Senior Advocate who intervened in, these petitions urged one more contention. According to him, a director in any event who is not ordinarily residing inside the State is not liable to pay the profession tax. According to him, his residence must be more than transient or casual. ( 14 ) MR. V. Krishnamurthy, learned Senior Advocate who intervened in, these petitions urged one more contention. According to him, a director in any event who is not ordinarily residing inside the State is not liable to pay the profession tax. According to him, his residence must be more than transient or casual. In the view that we have already taken, we do not think that it is necessary to decide this question in these petitions. ( 15 ) IN the result, the rule is made absolute ; we hold that Entry 6 in the schedule under S. 3 of the Act is beyond the legislative competence and also beyond the scope of 8. 3 and therefore void. ( 16 ) THE petitioners are entitled to their costs. Advocate's fee Rs. 250/ -. --- *** --- .