9911796707
TMI Blog1968 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the assessee was entitled to allowance of the entire remuneration paid to the directors in each of the years. The propriety of this view is the subject-matter of the first question under reference which is : " Whether, on the facts and in the circumstances of the case, the Tribunal's order allowing the remuneration of the managing director and director in full for the assessment years 1949-50 to 1953-54 as a proper claim under section 10(2)(xv) of the Income-tax Act is based on any material ? " There is also another question which raises the admissibility of an allowance for the initial and extra depreciation under section 10(2)(via) of the Income-tax Act. But this is confined to the year 1950-51. The question referred to us rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector had contributed very largely to the business of the assessee, the increase in the gross collections in the transport business of the assessee could be attributed to natural causes as, for instance, the increase in seating capacity, travel habits of the public and the economy in the working cost which came out of experience. Certain other considerations also were urged which basically did not differ from that approach of the revenue to the question of admissibility of the allowance. The Tribunal, however, was of opinion that the entire remuneration paid to the directors in each of the years was expenditure laid out wholly and exclusively for the purpose of business and the assessee was, therefore, entitled as a matter of right to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure and the purpose of the business and the expenditure should have been wholly and exclusively laid out for that purpose. The first part of this proposition may not raise any problem of complexity, for its determination will be on a factual basis. From the given facts, it should be easy to say whether there is any connection between the expenditure and the purpose of the business. But the expression, "wholly and exclusively laid out" is capable of raising fine questions. But we do not propose in this case to embark on that aspect, for it has not been suggested at any stage of the assessment proceedings that factually the payment as remuneration has not been made and in that character. It is also obvious that the remuneration was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(4A) and suggested that this provision is but clarificatory of section 10(2)(xv). He said that, though section 10(4A) was inserted on April 1, 1956, and the present case concerns the years prior thereto, nevertheless on the application of the principle of this new provision, we should probe into the circumstances of the payment of remuneration to the board of directors and rule that the assessee being a close company as it is, the revenue was justified in allowing only a part of the allowance claimed. In our opinion, the revenue is not entitled to take up this stand. That was not the point of view of the revenue at any stage below. Further, we are not satisfied that sub-section (4A) was merely clarificatory of section 10(2)(xv). This is be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
