9911796707
TMI Blog1997 (4) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... hether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the commission paid to the directors was part of remuneration for the purpose of computation of disallowance under section 40(c) of the Income-tax Act?" In so far as the first question is concerned, Mr. Janarthana Raja, learned counsel appearing for the assessee, has fairly stated that the issue whether the surtax liability paid by the assessee is an allowable deduction or not is settled by a decision of the Supreme Court in Smith Kline French (India) Ltd. v. CIT [1996] 219 ITR 581, wherein the Supreme Court has held that the surtax paid is not an allowable deduction in the computation of the business income of an assessee. Following the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue, submitted that section 40(c) of the Act would apply to directors as well. We have carefully considered the rival contentions of the parties. Section 40(c) of the Act applies to the directors, and under section 40(c)(i) of the Act if there is any expenditure incurred by the company which has resulted, directly or indirectly, in the provision of any remuneration or any benefit or any amenity to a director or to a person who has a substantial interest in the company or to a relative of these persons, then the said expenditure is also subject to ceiling limit prescribed under section 40(c) of the Act. The question that arises is whether section 40(c)(i) of the Act would apply to the directors. A mere reading of section 40(c) of the Act cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court held that the commission paid to an employee is also a salary. The Supreme Court held as under : "Conceptually there is no difference between salary and wages, both being a recompense for work done or services rendered, though ordinarily the former expression is used in connection with services of non-manual type while the latter is used in connection with manual service. The expression 'wages' does not imply that the compensation is to be determined solely upon the basis of time spent in service ; it may be determined by the work done ; it could be estimated in either way. If conceptually salary and wages mean one and the same thing then salary could take the form of payment by reference to the time factor or by the job do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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