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TMI Blog1993 (4) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... company to its directors was an additional remuneration forming part and parcel of the salary allowed to them and that the said remuneration would not be covered by section 40(a)(v) of the Income-tax Act and thereby allowing the assessee's claim for allowing the deduction of the whole amount of commission paid to the directors ? (ii) Whether the Tribunal was right in their view that the words whether convertible into money or not used in section 40(a)(v) of the Act postulated that the benefit, amenity or perquisite mentioned therein covers benefit, amenity or perquisite allowed in kind but not in cash ? (iii) Whether the Tribunal was right in holding that the expenditure of Rs. 19,386 for the assessment year 1971-72 and Rs. 29,283 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellate Assistant Commissioner held that the commission on sales cannot be treated as "perquisites". He also held that the expenditure on dinner and tea cannot be characterised as entertainment expenditure and ought not to have been disallowed. The Revenue preferred appeals before the Tribunal against the orders of the Appellate Assistant Commissioner, which were dismissed by the Tribunal, following its order dated August 25, 1973, relating to the assessment years 1967-68 to 1969-70. The order dated August 25, 1973, dealt, inter alia, with the questions arising herein and held the same against the Revenue. An application under section 256(1) was dismissed by the Tribunal. The first question urged before us which was also the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments not deductible in certain circumstances. - (5) (a) Where the assessee (i) incurs any expenditure which results directly or indirectly in the payment of any salary to an employee or a former employee, or (ii) incurs any expenditure which results directly or indirectly in the provision of any perquisite (whether convertible into money or not to an employee or incurs directly or indirectly any expenditure or is entitled to any allowance in respect of any assets of the assessee used by an employee either wholly or partly for his own purposes or benefit, then, subject to the provisions of clause (b), so much of such expenditure or allowance as is in excess of the limit specified in respect thereof in clause (c) shall not be allowed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly or indirectly in the payment of any salary to an employee or a former employee, or (2) Where the assessee incurs any expenditure which results, directly or indirectly, in the provision of any perquisite (whether convertible into money or not) to an employee; (3)(a) Where the assessee incurs directly or indirectly any expenditure or provides an allowance in respect of any assets of the assessee used by the employee either wholly or partly for his own purposes or benefit; (b) Where an employee of the assessee is provided any allowance entitled to any allowance in respect of any assets of the assessee used by such employee either wholly or partly for his own purposes or benefit. In any of these situations, so much of such expenditure or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee. Learned counsel for the Revenue, Shri Manchanda, argued that the words " whether convertible into money or not " bring out the intention of Parliament and support his contention. He says, there is no reason not to include cash payment within the ambit of sub-section (5) of section 40A. We are, however, not concerned with the generality of cash payments but only with the payment concerned herein. Reading the sub-section as a whole and having regard to the language employed therein, the payment concerned herein does not fit into it. The employees concerned herein also happen to be directors. The provision in clause (c) of section 40 applies to directors among others. Of course, section 40(c) is applicable only to companies whereas sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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