TMI Blog1984 (3) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... here as they involve minor issues]. 5. The assessee-company had paid salary of Rs. 48,000 to two directors and perquisites in the shape of house rent and water, gas and electricity totalled Rs. 24,322. The said payment was in cash. The ITO allowed Rs. 9,600 being one-fifth-of salary of Rs. 48,000 and disallowed balance of Rs. 14,722. 6. The Commissioner (Appeals) following the Bombay Special B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1983] 144 ITR 936 (Kar.). We are unable to accept the revenue's contention. Forbes, Ewart Figgis (P.) Ltd.'s case dealt with the limit specified under section 40(a)(v) and section 40A(5) and did not deal with the provisions of section 40(c) in contradistinction to section 40A(5). Section 40(a)(v) was omitted by the Finance (No. 2) Act, 1971, with effect from 1-4-1972 and section 40A(5) covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned above. The Supreme Court rejected the special leave petition against the said judgment on the question whether the managing director as an employee and whether the salary paid to him was subject to limits imposed under section 40A(5). 9. International Instruments (P.) Ltd. v. CIT [1981] 130 ITR 315 (Kar.) held that ceiling of Rs. 72,000 applied to director under section 40A(5) as the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the limit of Rs. 72,000 applied in the case of employee director under section 40A(5) and that the same was the limit under section 40(c). 10. Tarun Commercial Mills Ltd's. case did not deal with existing provisions of law but dealt with section 40(c) and section 40(a)(v). The later section was omitted by the Finance (No. 2) Act, 1971 with effect from1-4-1972and in its place section 40A(5) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the first proviso to section 40A(5) is applicable to a director. 12. Thus, the unanimous position is that only ceiling of Rs. 72,000 was applicable to a director whether he was an employee of the company or not. Applying the said test to the remuneration of the two directors of Rs. 48,000 and the perquisites of Rs. 24,322 in the shape of house rent allowance and water, gas and electricity char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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