9911796707
TMI Blog1966 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... per month plus a commission at 10 per cent. of the net profits of the company. The total remuneration of the managing agents for the relevant accounting year was computed at Rs. 11,70,899. For the relevant accounting year there were five directors of the appellant-company. Two of these directors were Sri Gajadhar Jaipuria and Sri Mungturam Jaipuria. These two directors were the nominees of the managing agents and were also the directors of Jaipuria Brothers Ltd., the managing agents. Under article 118 of the articles of association of the appellant-company, the five directors were entitled during the accounting year to director's fees at the rate of Rs. 100 per month to each director besides travelling expenses for attending the meetings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the directors had not rendered any extra service so as to entitle them to the additional remuneration. The appellant-company preferred an appeal to the Appellate Assistant Commissioner but the appeal was dismissed. The appellant-company took the matter in further appeal to the Appellate Tribunal which affirmed the view of the Income-tax authorities that the amount was not admissible as a deduction under section 10(2)(xv) of the Income-tax Act. Under section 66(2) of the Income-tax Act the Appellate Tribunal referred the following question of law for the opinion of the High Court : " Whether the sum of Rs. 1,11,090 paid as remuneration to the five directors of the assessee-company during the relevant previous year was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact of actual payment, no discretion is left to the Income-tax Officer except to hold that the payment was made wholly and exclusively for the purposes of the business. Although the payment might have been made and although there might be an agreement in existence, it would still be open to the Income-tax Officer to take into consideration all the relevant factors which will go to show whether the amount was paid as required by section 10(2)(xv). The question as to whether an amount claimed as expenditure was laid out or expended wholly and exclusively for the purpose of such business, profession or vocation has to be decided on the facts and in the light of the circumstances of each case. But, as observed by this court in Eastern Inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und 10,000 was debited in the accounts as directors' fees. The Commissioner of Income-tax disallowed this item to the extent of pound 8,000 and the question that fell for determination of the Judicial Committee was whether this disallowance was justified. At page 269 of the Report, the Judicial Committee pointed out that the true issue that arises in cases like this is whether there was evidence before the magistrate on which he was entitled to refuse to hold it proved that the pound 10,000 had been exclusively incurred in the production of the assessable income and that the assessment was excessive. A similar view was expressed by the Bombay High Court in Jethabhai Hirji and Co. v. Commissioner of Income-tax and it was held in that case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits was not due to any special exertion of the directors which alone could justify the payment of any extra remuneration. In view of these facts and circumsances, the Appellate Tribunal held that the expenditure was not incurred wholly and exclusively for the purposes of the business of the appellant-company. The same view has been taken by the High Court which also found that the appellant was not entitled to claim deduction of this expenditure under section 10(2)(xv) of the Income-tax Act. In our opinion, learned counsel on behalf of the appellant has been unable to show that the view taken by the High Court is, in any way, vitiated in law. It was contended on behalf of the appellant that the payment of remuneration to the directors wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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