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TMI Blog1967 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Appellate Tribunal, Allahabad Bench (hereinafter referred to as the Tribunal), along with a statement of the case inviting the opinion of this court on the following question of law : " Whether, on the facts and in the circumstances of the case, the remuneration paid to the directors for the period April 7, 1951, to July 13, 1951, is a permissible deduction under the provisions of the Income-tax Act ? The facts stated by the Tribunal in brief are as follows : Shri Thakurji Engineering Works Limited, Mirzapur (hereinafter referred to as the assessee) is a private limited company incorporated on 13th of July, 1951. This company took over as going concerns two businesses, that is, the iron foundry business under the name and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors were paid a sum of Rs. 600 each from 7th of April, 1951, to 25th of March 1952, on which date (the latter date) the company closed its accounts for the first year. In the assessment proceedings the Income-tax Officer, acting on another resolution dated April 6, 1952, of the board of directors voluntarily reducing their salary from Rs. 600 to Rs. 225 per month each, allowed the director's remuneration at the rate of Rs. 225 per month and disallowed the balance on the ground that it was unreasonable and excessive. In appeal, the Appellate Assistant Commissioner affirmed the decision of the Income-tax Officer. The assessee then preferred a second appeal before the Tribunal, which allowed the remuneration to the directors at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the same breath, accept the resolution of the company that the total business done up to 16th of September, 1951, would be deemed to be the business done by the applicant-company and yet refuse to recognise it as such for business deductions. The assessee voluntarily submitted a return claiming assessment as a company. This move on the part of the assessee was not prompted by any action taken by the Income-tax Officer, but was an unilateral act of the assessee. The Income-tax Officer or the Appellate Assistant Commissioner or the Tribunal could give the benefit of the payments made to the aforesaid four directors as their salary only if the amounts paid to these directors for the period commencing with the 7th of April, 1951, to 12th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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