TMI Blog1973 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ingam Chettiar was the secretary of the company till first November 1, 1959. From first November, 1959, he was appointed as general manager of the assessee-company by the board of directors to be in overall charge of the mills. The remuneration paid by the company to the said Chockalingam Chettiar as general manager for the years ending March 31, 1960, March 31, 1961, and March 31, 1962, relevant for the assessment years 1960-61, 1961-62 and 1962-63 were Rs. 14,706, Rs. 31,875 and Rs. 31,875, respectively. His salary as secretary up to October 30, 1959, was included in the remuneration of the managing agents. The assessee-company claimed the above amounts paid as remuneration to the said general manager after November 1, 1959, as expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following question has been referred : " Whether, on the facts and in the circumstances of the case, the payments of Rs. 14,706, Rs. 31,875 and Rs. 31,875 paid to the general manager, M. S. Chockalingam Chettiar, in the previous year, relevant for the assessment years 1960-61, 1961-62 and, 1962-63, were admissible expenditure under the Income-tax Act, 1961 ? " It is contended on behalf of the revenue that the payment was in contravention of the provisions in section 360 of the Indian Companies Act and, therefore, the payments cannot be allowed as a deduction. It is also contended that the question of allowability has to depend upon whether the payments were legal, and, therefore, the provisions of the Companies Act stand automatically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny shall not waive the recovery of any sum refundable to it under sub-section (1) unless permitted by the Central Goverment. The revenue contends that in view of the said provision in section 363 Chockalingam Chettiar should be treated as a trustee for the amount received by him and, therefore, it cannot be said to be an outgoing, and that unless it is an outgoing or a payment out it cannot be claimed as a deduction. It refers to the decision in Indian Molasses Co. v. Commissioner of Income-tax to show as to how the word " expenditure " occurring in section 10(2)(xv) is to be construed. In that case it was observed : " ' Expenditure ' is equal to ' expense ' and ' expense is money laid out by calculation and intention though in many uses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of remuneration to him along with the commission paid to the managing agents far exceeded the limit specified in section 348 of the Companies Act. Such disallowance was questioned before this court. It was held in that case that the Income-tax Act is a self-contained code, that the allowability of a deduction under section 10(2)(xv) has to be considered only in the light of the provisions of the Income-tax Act, and that it is not possible to travel outside the provisions of that Act and deny the benefit of that section, on the ground that the payment is unauthorised or has been prohibited by some other statute. In view of the said decision even though there is an infringement of section 360 of the Companies Act in this case, still there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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