TMI Blog1984 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is 1976-77 ending on September 30, 1975. The ITO framed the assessment under s. 143(3) of the I.T. Act, 1961, on February 16, 1979. While completing the assessment he had allowed the claim for directors' remuneration to the tune of Rs. 38,188 paid to them for the period between February 1, 1975 to September 30, 1975. This amount included the remuneration paid to the directors to the tune of Rs. 14,800, house rent Rs. 3,300 and travelling expenses of the directors Rs. 20,088. The Commissioner of Income-tax exercising jurisdiction under s. 263 issued a notice to show cause to the assessee and after hearing the assessee came to the conclusion that this remuneration to the directors to the tune of Rs. 38,188 could not have been allowed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in s. 3 and " private company " in s. 3(1)(iii) and it has been further provided in this definition that the restrictions on private company are only what have been provided in this definition and they are not all those restrictions which apply to a public limited company. Section 28 of the Companies Act provides for adoption and application of Table A in Sch. in the case of companies limited by shares and it was contended that it is not disputed that this is a company limited by shares and because of s. 28 as there is no specific provision excluding the operation of Table A in Sch. 1. Table A in Sch. I will be applicable to this company. It is further contended that Table A in Sch. 1, item 65, provides for remuneration to the directors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie view to justify the exercise of jurisdiction under s. 263 but there is no direction made by the Commissioner to disallow this as the matter was sent back with a direction to proceed with the assessment in accordance with law. It was also contended that similarly the order passed by the Tribunal on appeal also has not decided the question as the matter was open before the ITO afresh and it was contended, therefore, that the question does not arise from the order of the Tribunal and an answer to the question is not necessary. On merits an attempt was made by the learned counsel for the Department to suggest that as the ITO had not gone into the question and as the matter has been sent back to him, it is open to the ITO on enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 1977 retrospectively justified the payment made to the directors. It could not, therefore, be said that the Commissioner did not decide the question finally. This view taken by the Commissioner has been maintained by the Tribunal, and, therefore, the contention advanced by the learned counsel for the Revenue that the matter is yet open does not appear to be justified. It is further clear that when the assessee sought a reference from the Tribunal to this court, the Tribunal made a reference framing this question as arising out of the order of the Tribunal. If the Tribunal was of the view that the question was still open, it would have been free to say so by saying that as the question is not yet decided, no question of law arises. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a company similar to this regulation, the directors will not be entitled to travelling expenses, etc. Young v. Naval, Military and Civil Service Co-operative Society of South Africa Ltd. [1905] 1 KB 687. It may be noted that remuneration under s. 309 does not include travelling expenses. In this view of the matter, it could not be said that without modifying or amending the articles of association, remuneration could not be paid to the directors. Apart from it, the remuneration paid to the directors has been further rectified by the resolution of the company and, therefore, it could not be said that this payment was an unauthorised payment and, therefore, could not be allowed while assessing the company. Thus, the view taken by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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