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Issues Involved:
1. Allowability of royalty payment for the use of trade mark as revenue expenditure. 2. Exclusion of reimbursement of medical expenses while computing disallowance under section 40(c) of the Income-tax Act, 1961. Issue 1 - Royalty Payment for Trade Mark: The assessee claimed deduction of Rs. 19,449 as royalty payment for the use of the trade mark "Tebilized". The Income-tax Officer initially disallowed the claim, but the Commissioner of Income-tax and the Tribunal allowed the deduction, considering it as revenue expenditure. The court referred to a previous decision and held that the amount of royalty paid for the trademark was indeed a revenue expenditure, similar to a previous case involving the same trademark. Therefore, the court answered question No. 1 in the affirmative, in favor of the assessee and against the Revenue. Issue 2 - Reimbursement of Medical Expenses: Regarding the reimbursement of medical expenses for the managing director, the Income-tax Officer included it in the remuneration for disallowance under section 40(c) of the Income-tax Act. However, the Commissioner of Income-tax (Appeals) directed to exclude the sum of Rs. 9,918 for medical expenses while computing the remuneration. The Tribunal upheld this decision. The court referred to a previous case and interpreted section 40(c)(i) which states that any expenditure resulting in the provision of remuneration or benefit to a director is not allowable if it exceeds Rs. 72,000 per year. The court held that medical reimbursement falls under this section and should not have been excluded by the Tribunal. Therefore, the court answered question No. 2 in the negative, in favor of the Revenue and against the assessee. Separate Judgment: There shall be no order as to costs.
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