JUDGMENT Ajit K.Sengupta, J. 1. IN this reference, the Tribunal has referred to this court under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, the following question of law : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the remuneration of the assessee as managing director of the company, Pile Foundation Construction Co. (India) Pvt. Ltd., is assessable under the head 'Salary' as there existed the relationship of an employee and employer ?" 2. THE facts shortly stated are that the assessee had shown the director's remuneration under the head "Salary" and claimed standard deduction under Section 16(i) of the Act. THE Assessing Officer, however, held that the assessee as a managing director of Pile Foundation Construction Co. (I) Pvt. Ltd., which paid the remuneration, enjoyed wide power and control over the affairs of the company and, therefore, his position did not stand at par with that of the other employees of the company and that the existence of the contractual relationship of employer and employee could not also be established or proved. He, therefore, assessed the income under the head "Other sources" disallowing the claim of standard deduction under Section 16(i). On appeal, the Appellate Assistant Commissioner, after referring to Clauses 68(a) and 49 of the articles of association of the company, observed that the assessee being the first managing director of the company, had to act and discharge all the duties and powers vested in the board of directors and that on the totality, on reading the memorandum and articles of association, it could not be said that the employer-employee relationship existed between the company and the assessee. In that view, the Appellate Assistant Commissioner upheld the action of the Assessing Officer. 3. BEING dissatisfied, the assessee came up in second appeal before the Tribunal, The Tribunal observed that Clause 68(a) of the articles of association, on the basis of which the Assessing Officer had come to the conclusion, was not happily worded and that a combined reading of Clauses 64, 65, 66 and 68 made it clear that the managing director shall act and discharge all the duties and powers subject to the direct control and supervision of the board of directors. The Tribunal thereby held that the remuneration received by the assessee from the said company as managing director was assessable under the head "Salary" as there existed an employer-employee relationship between the company and the assessee. 4. BEFORE us counsel for the parties reiterated the same contentions as were urged before the Tribunal. We find that the Tribunal in coming to its conclusion had followed its earlier decision in the assessee's case for the assessment years 1978-79 to 1981-82. Our attention was drawn by learned counsel appearing for the assessee to the different clauses of the articles of association of the company, Pile Foundation Construction Co. (I.) Pvt. Ltd., viz., Clauses 64, 66, 68 and 75. A combined reading of these clauses makes it clear that the managing director acts and discharges his duties subject to the control and supervision of the board of directors. Learned counsel for the Revenue, however, sought to impress on us that the powers of the managing director over the affairs of the company are of such wide ambit as precluding the relationship of employer and employee between the assessee and the company. 5. WE find that the question as sought for by the Revenue and referred by the Tribunal does not contest the Tribunal's reading of the aforementioned clauses as incorrect nor is it the case of the Revenue as appearing from the question that the Tribunal's reading of the clauses is misconceived and not conformable with the express terms of those clauses, though the Tribunal has principally based its decision on such reading. The effect of the clauses of the articles of association as read by the Tribunal going uncontested, it is not open to the Revenue to say that there was no jural relationship of employer and employee between the company and the assessee as its managing director. Once the Tribunal holds that the managing director functions subject to the control and supervision of the board of directors, the inevitable corollary is that the employer-employee relationship exists. That being so, the question whether the remuneration is assessable under the head "Salary" is clearly answerable in the affirmative. Reference may be made in this connection to the decision of the Supreme Court in Ram Prashad v. CIT. That being so, the question whether the remuneration is assessable under the head "Salary" is clearly answerable in the affirmative. Reference may be made in this connection to the decision of the Supreme Court in Ram Prashad v. CIT. There the Supreme Court has laid down that to ascertain whether a person is a servant or an agent, a rough and ready test is, whether, under the terms of his employment, the employer exercises a supervisory control in respect of the work entrusted to him. A servant acts under the direct control and supervision of his master. An agent, on the other hand, in the exercise of his work, is not subject to the direct control or supervision of the principal, though he is bound to exercise his authority in accordance with all lawful orders and instructions which may be given to him from time to time by his principal. But, this test is not universal in its application and does not determine in every case, having regard to the nature of employment, that he is a servant. It is the nature of the particular business and the nature of the duties of the employee which will require to be considered in each case. A person who is engaged to manage a business may be a servant or an agent according to the nature of his service and the authority of his employment. 6. IN the said decision, the Supreme Court further observed that a managing director may have a dual capacity, he may both be a director as well as an employee. Whether or not a managing director is a servant of the company, apart from his being a director, can only be determined by the articles of association and the terms of the employment. However, it is to be remembered that the control which the company exercises over the director need not necessarily be one which tells him what to do from day to day nor does supervision imply that it should be a continuous exercises of the powers to oversee or superintend the work to be done. The control and supervision is to be exercised in terms of the articles of association by the board of directors and the company in its general meeting. Following the tests laid down by the Supreme Court, the Tribunal is correct in referring to the clauses of the articles of association. The control and supervision is to be exercised in terms of the articles of association by the board of directors and the company in its general meeting. Following the tests laid down by the Supreme Court, the Tribunal is correct in referring to the clauses of the articles of association. Unless the Revenue makes out a case that the Tribunal's reading of the respective clauses was not correct, the Tribunal's finding shall prevail. It may be mentioned that the Supreme Court in the decision cited by us was already aware of the possibility of the misconception stemming from the width of the powers held by the managing director. It is not the extent of the power which is the test. It is the ultimate accountability of the managing director to the company which determines the character of relation between the managing director and the company. The emphasis laid on behalf of the Revenue on the extensiveness of the powers is misplaced. 7. ACCORDINGLY, we hold that the Tribunal's finding that the remuneration received by the assessee as the managing director is income assessable under the head "Salary" is right. We, therefore, answer the question in the affirmative and against the Revenue. There will be no order as to costs.