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TMI Blog1978 (8) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... f the company and was admissible as deduction from the assessee's business income ? " The assessee before us is a private limited company and the assessment year is 1964-65. In the year 1963, ie., the year under consideration, the company enlarged the ambit of its business activity as mentioned in the statement of case, with the result that it enhanced the remuneration payable to the managing director and other directors ; it also appointed one Dinubhai G. Desai as a liaison officer and paid him a monthly remuneration of Rs. 1,400 for ten months. All these persons were concerned with the group controlling the company. The ITO considered that the remuneration paid to the following persons, viz., Smt. Khatau, R.D. Desai, S.D. Desai and Din ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of remuneration by comparing the remuneration paid in this year with the remuneration earlier paid and ignoring or not sufficiently emphasising the change in the nature of the company's activity, which was such a tremendous change, that from the commercial point of view, enhanced remuneration as paid to all the persons was required to be paid and ought to have been allowed. It was further pointed out that the ITO has emphasised that if all such remuneration were allowed as necessary deduction, the amount of net taxable profits would come down to a very low figure as contrasted with the gross profits. It was submitted that such an approach was not justified. As far as the Tribunal's order is concerned, it was submitted that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and was in constant contact with 30 textile mills from whom business was secured. He was looking after purchases from Inarco Ltd. and was also concerned with the recovery work. The Tribunal in his case has allowed remuneration at the rate of Rs. 1,000 per month without giving any cogent reason for the reduction from the amount paid by the company. Similar is the situation for S. D. Desai who was the branch manager at Ahmedabad. In his case, the Tribunal reduced his remuneration from Rs. 1,000 per month paid by the company to Rs. 700 per month. In the case of Dinubhai G. Desai, who from the name appears to be the principal person concerned with the firm which was taken over, the Tribunal upheld the reduction from Rs. 1,400 per month pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Tribunal has not properly applied its mind to the various relevant considerations and the considerations which are to be found in its order cannot be regarded as wholly satisfactory. This, however, may not mean that we can assume to ourselves the jurisdiction which is that of the Tribunal. We were then invited to answer the question in a manner which would indicate to the Tribunal that the manner of disallowance made by it was defective and that the Tribunal should come to a proper conclusion bearing in mind the various relevant circumstances, considered even from a businessman's point of view, and also bearing in mind what was subsequently allowed as a deduction by the ITO. We think that, in the circumstances, this would be the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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