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TMI Blog1976 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to act under section 10(4A) of the Indian Income-tax Act, 1922 (hereinafter called "the Act"). Though the Income-tax Officer held that the payment of the remuneration could be supported as having been wholly and exclusively for the purpose of the business under section 10(2)(xv) and the payment of bonus satisfied the conditions prescribed under section 10(2)(x) of the Act, he was of the view that the payment was excessive and unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to the company. But, on a further appeal, the Appellate Assistant Commissioner held that, having regard to the services rendered by these directors, the benefits derived by the company and the increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10(4A) of the Indian Income-tax Act, 1922, and that the payment of bonus was also not unreasonable under section 10(2)(x) of the same Act ?" There is no dispute that the remuneration paid to the directors was wholly and exclusively for the purpose of the business and, therefore, is an allowable deduction under section 10(2)(xv). Similarly, the bonus paid to these directors is also an allowable deduction under section 10(2)(x). But what is contended by the learned counsel for the revenue in this reference is that the fact that the payments are allowable deductions under section 10(2)(x) or 10(2)(xv) does not in any way affect the applicability of section 10(4A) and that provision will have to be considered with reference to the amalga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner and the Tribunal could go into the reasons on which that opinion was formed and if the Tribunal or the Appellate Assistant Commissioner was of the view that the opinion was reached on extraneous considerations or irrelevant material or the reasons given are not germane it could interfere with the order. If that is so, against the order of the Tribunal the aggrieved party could ask for a reference on the question of legality of the view taken by the Income-tax Officer. Section 10(4A) itself states that the excessiveness or the unreasonableness of the allowance has to considered "having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom". The use of the words "having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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