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TMI Blog1997 (11) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... t the instance of the assessee by the Income-tax Appellate Tribunal, for the assessment year 1978-79 under section 256(1) of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), reads as under : "Whether, on the facts and in the circumstances of the case, the commission paid to the director could be regarded as remuneration within the meaning of section 40(c) of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not liable to be included in determining the ceiling prescribed under section 40(c) of the Act. The Income-tax Officer, however, rejected the claim of the assessee on the ground that what was paid by the company to the director was remuneration and limited the allowance of the expenditure by invoking the provisions of sub-clause (i) of clause (c) of section 40 of the Act. The Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (c) of section 40 of the Act. He submitted that the Bombay Tribunal has taken a view that the commission paid to a director cannot be the subject-matter for disallowance under section 40(c) of the Act. Mr. C. V. Rajan, learned counsel for the Revenue, on the other hand, submitted that the commission paid is in fact a remuneration paid to the director and, therefore, the remuneration paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court also held that the salary can be fixed on the basis of time spent in service or on the basis of work done or partly by the time spent in service and partly by the work done. The decision of the Supreme Court makes it clear that whatever may be the basis for fixing the remuneration, the remuneration was paid to the director for services rendered by the director to the company and the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a remuneration within the scope and ambit of section 40(c) of the Act and the allowance of remuneration paid to the director is subject to the ceiling limit prescribed thereunder. We, therefore, hold that there is no infirmity in the order of the Appellate Tribunal in holding that the commission paid to the director should also be taken into account for the purpose of determining the limit of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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