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TMI Blog1972 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10(4A) of the Act? 2. Whether, on the facts and in the circumstances of the case, a part of the expenditure of Rs. 11,700 incurred on the purchase of crockery and linen was liable to be disallowed as capital expenditure ? 3. Whether, on the facts and in the of the case, the deduction claimed by the assessee-company of the sum of Rs. 1,500 on account of the medical expenses incurred on the treatment of its chairman was allowable ?" The assessee is a private limited company and runs a hotel known as "Carlton Hotel" at Lucknow. The assessment year involved is 1960-61. Prior to the previous year, the assessee-company was managed by its Chairman, Sri Ranjit Singh, and his two sons as joint managing directors. During the previous year, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Officer as also to the Income-tax Appellate Tribunal to disallow an expenditure, if it has not been incurred for the legitimate business needs of the assessee. The legitimate need having been found a part of the salary could not be disallowed, particularly when the salary paid to the third joint managing director was the same as was being drawn by the other directors. There was thus no material for the Tribunal to hold that the remuneration paid to the additional director was excessive. We, accordingly, answer question No. 1 in the negative in favour of the assessee and against the department. The next question relates to the expenditure incurred on the purchase of crockery and linen for the purpose of the assessee's hotel busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o material whatsoever before the Tribunal for disallowing a portion of the claim on this count. Accordingly, question No. 2 is answered in the negative, in favour of the assessee and against the department. The third item relates to a sum of Rs. 1,500 which was incurred by the company on the medical treatment of its chairman. The expenditure was authorised by a resolution of the company dated February 26, 1958. The chairman was only drawing an honorarium of Rs. 100 per month, whereas the joint directors were drawing a remuneration of Rs. 500 per month. In the circumstances it cannot be said that the resolution passed by the company was not bona fide. The Tribunal has disallowed the claim on the ground that there were no rules or regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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