TMI Blog1995 (9) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in directing the Income-tax Officer to apply the provisions of section 40(c) instead of section 40A(5) of the Act in respect of the remuneration due to the managing directors who have been treated as employees of the company ? " (2) Whether the Appellate Tribunal is right in law and on facts in directing the Income-tax Officer not to include the value of medical reimbursement as a perquisite ? (3) Whether the Appellate Tribunal is right in law in deleting the addition of Rs. 1,89,190 (Rs, 1,13,830 + Rs. 75,360) on the ground that the amount of Rs. 1,89,190 represented the sales tax and Central sales tax liability for the last quarter of the accounting year and was deposited by the assessee not only within the statutory time-limit p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing income from its business. The Tribunal in its decision, has held that for the purpose of computing the income of the company the maximum limit up to which the amount spent by the company in paying the remuneration to its directors could be allowed as expenditure under section 40(c) for the purpose of payment of tax was applicable under section 40A(5) by accepting the contention of the assessee. The matter has now been concluded by a decision of the Supreme Court in the case of CIT v. Indian Engineering and Commercial Corporation P. Ltd. [1993] 201 ITR 723 at page 728, wherein it has been held as under : " The employees concerned herein also happen to be directors. The provision in clause (c) of section 40 applies to directors among ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective statutes and also before the date of furnishing returns under section 139(1), section 43B would not be applicable and, consequently, such existing liability but not actually paid until the end of the previous year on account of sales tax cannot be the income of the assessee. For the same reason, additions made on account of unpaid contribution to the Employees' State Insurance and the Provident Fund remaining outstanding on the last date of the previous year but actually paid before filing of the return was ordered to be deleted. It is to be noticed that the following proviso to section 43B was inserted by the Finance Act, 1987, which reads as under : " Provided that nothing contained in this section shall apply in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to section 43B being effective from the date of the insertion of section 43B, that is, April 1, 1984, the Tribunal was right in holding that, to the extent payments of sales tax and contribution to the Employees' State Insurance and the Provident Fund were made by the assessee within the time-limit set out in the proviso, no recourse to section 43B can be had. Accordingly, questions Nos. 3 and 5 are answered in favour of the assessee and against the Revenue. In view of our answer to question No. 3 being in the affirmative, question No. 4 which is referred to us as consequential upon the answer to question No. 3 in the negative, does not call for any decision thereon. In our opinion, question No. 6 becomes academic and need not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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