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TMI Blog1967 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and in the circumstances of the case and in view of the provisions of section 10(4A) of the Income-tax Act, 1922, the remuneration of Rs. 500 per month allowed by the Tribunal to Sarvsri C. M. Gupta and M. C. Gupta is an allowable business expenditure under section 10(2)(xv) of the said Act ? " The assessee is a private limited company which was incorporated on March 26, 1955. It commenced business on May 26, 1955, at Lucknow, as distributors of Tata Mercedes Benz trucks and motor chassis in the eastern districts of Uttar Pradesh. The shareholders of the company at the time of its start were Sarvsri C. M. Gupta, M. C. Gupta and R. P. Gupta. The first two are cousin brothers while the third one is an outsider. All these three persons are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta as fees payable to him for having attended five meetings of the board of directors (at the rate of Rs. 400 per meeting). The assessee-company appealed to the Tribunal. The Tribunal held that even though it was true that Sarvsri C. M. Gupta and M. C. Gupta had no background which should justify this remuneration paid to them, they having purchased shares in this limited concern of equal value as the shares purchased by Sri R. P. Gupta, were entitled to some amounts by way of return for financing the enterprise. It, therefore, allowed a sum of Rs. 500 per month each to the aforesaid two directors as allowable expenditure and held that the balance of the remuneration paid to them must be considered to be a payment for extra commercial r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. " Allowance could, therefore, be made of an expenditure incurred exclusively for the purpose of the business of the company. Section 10(4A) of the Act, so far as relevant for our purposes, reads : " 10. (4A) Nothing in sub-section (2) shall, in the computation of profits and gains of a company, be deemed to authorise the making of :--- (a) any allowance in respect of any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to director or a person who has a s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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