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TMI Blog1975 (6) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... 1965-66, 1966-67, 1967-68 and 1968-69 in view of the provisions of section 40(c) of the Income-tax Act, 1961 ? The facts of the case are as follows : The assessee-company was incorporated in 1961, with technical collaboration of M/s. Great Lakes Carbon Corporation of U.S.A. to undertake the manufacture of calcined petroleum coke, calcined anthracite coke, chemicals and chemical products. The company was established at Noonmati in Gauhati in 1962 with an initial capacity of 30,500 tons per annum. The Income-tax Officer, in the course of assessment for the assessment year 1965-66, found that the company had claimed a deduction of Rs. 69,378 being the remuneration payable to the managing director of the company, Shri B. Himatsingka, who in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka Timbers Ltd. The Income-tax Officer, however, was not satisfied about the nature of service rendered by Shri Himatsingka in the above company and he was also not satisfied about the payment of remuneration at a fixed percentage of net profit in a " fast developing monopoly concern " as the assessee was. The Income-tax Officer further noted that the company was a pioneer in calcined coke manufacturing industry in India and had the monopoly of the supply of these raw materials to the aluminium industry. Having regard to the special position, the managing director had hardly any scope to render any service for capturing the market or for any other purpose ancillary to the sale of its products. He further remarked that the company had alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectively, and disallowed the balance under the provisions of section 40(c) of the Income-tax Act. The assessee preferred appeals before the learned Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner considered the facts of the approval given by the Company Law Administration, the business experience and abilities of Shri Himatsinghka, and that preference shares of Rs. 10,00,000 were owned by the Government of Assam which constituted about 1/5th of the company's capital and came to the view that it was not very easy for Shri Himatsingka to have got the resolution passed in his favour. The Appellate Assistant Commissioner also did not agree with the view of the Income-tax Officer that in the line of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration. The Tribunal in its judgment also noticed the qualifications and the background of Shri Himatsingka and the interest taken by him in organising the business of the company. Considering the facts and circumstances of the case the Tribunal held that the remuneration of the managing director at 5% of the profits could not be held to be excessive nor could it be held that it was from consideration other than business as alleged by the Income-tax Officer. For these reasons, the Tribunal upheld the order of the Appellate Assistant Commissioner. We have perused the judgment of the Tribunal and it is found that the Tribunal has considered all the facts and circumstances of the case as appear from the record and has come to the definite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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