9911796707
TMI Blog1967 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... neration paid to the directors for the period April 7, 1951, to July 13, 1951, is a permissible deduction under the provisions of the Income-tax Act ? The facts stated by the Tribunal in brief are as follows : Shri Thakurji Engineering Works Limited, Mirzapur (hereinafter referred to as the assessee) is a private limited company incorporated on 13th of July, 1951. This company took over as going concerns two businesses, that is, the iron foundry business under the name and style of Shri Thakurji Engineering Works and the tobacco business under the name and style of Bandhulal Sukhdeo Ram, which were being carried on by the Hindu undivided family, styled as Shri Thakurji Engineering Works. On 6th of April, 1951, there was a partial partitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the board of directors voluntarily reducing their salary from Rs. 600 to Rs. 225 per month each, allowed the director's remuneration at the rate of Rs. 225 per month and disallowed the balance on the ground that it was unreasonable and excessive. In appeal, the Appellate Assistant Commissioner affirmed the decision of the Income-tax Officer. The assessee then preferred a second appeal before the Tribunal, which allowed the remuneration to the directors at the rate claimed by the assessee from the date of incorporation, namely, 13th of July, 1951, to the end of accounting year, holding it to be admissible deduction under section 10(2)(xv) of the Act, but refused to consider the payments made for the period from 7th of April, 1951, to 12t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a return claiming assessment as a company. This move on the part of the assessee was not prompted by any action taken by the Income-tax Officer, but was an unilateral act of the assessee. The Income-tax Officer or the Appellate Assistant Commissioner or the Tribunal could give the benefit of the payments made to the aforesaid four directors as their salary only if the amounts paid to these directors for the period commencing with the 7th of April, 1951, to 12th of July, 1951, could be held to be an expenditure not being in the nature of capital expenditure or personal expenses of the assessee, but one incurred wholly and exclusively for the purpose of such business, profession or vocation, It is clear from the statement of the case that, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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