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TMI Blog1967 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1922 (hereinafter referred to as the Act). The following question of law has been referred to us, as directed by this court by means of its orders dated August 31, 1962, and April 4, 1962: " Whether, on the facts and in the circumstances of the case and in view of the provisions of section 10(4A) of the Income-tax Act, 1922, the remuneration of Rs. 500 per month allowed by the Tribunal to Sarvsri C. M. Gupta and M. C. Gupta is an allowable business expenditure under section 10(2)(xv) of the said Act ? " The assessee is a private limited company which was incorporated on March 26, 1955. It commenced business on May 26, 1955, at Lucknow, as distributors of Tata Mercedes Benz trucks and motor chassis in the eastern districts of Uttar Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed the disallowance as business expenditure of the remuneration paid to Sarvsri C. M. Gupta and M. C. Gupta. He, however, allowed as business expenditure a sum of Rs. 2,000 out of the remuneration paid to Sri M.C. Gupta as fees payable to him for having attended five meetings of the board of directors (at the rate of Rs. 400 per meeting). The assessee-company appealed to the Tribunal. The Tribunal held that even though it was true that Sarvsri C. M. Gupta and M. C. Gupta had no background which should justify this remuneration paid to them, they having purchased shares in this limited concern of equal value as the shares purchased by Sri R. P. Gupta, were entitled to some amounts by way of return for financing the enterprise. It, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Section 10(2)(xv) of the Act reads : " 10. (2) Such profits or gains shall be computed after making the following allowances, namely : . . . (xv) any expenditure (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. " Allowance could, therefore, be made of an expenditure incurred exclusively for the purpose of the business of the company. Section 10(4A) of the Act, so far as relevant for our purposes, reads : " 10. (4A) Nothing in sub-section (2) shall, in the computation of profits and gains of a compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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