Directors' remuneration deduction fails where authorising resolution is unproved and expenditure is not wholly for earning income.

Directors' remuneration was not treated as an allowable deduction under section 5(j) of the Agricultural Income-tax Act, 1950 because the assessee failed to prove the authorising special resolution and related company records, and the payment details were not properly reflected in the audit material. The articles only contained a permissive clause and did not specify the amounts paid. The expenditure was also found to be influenced by personal considerations rather than incurred wholly and exclusively for earning agricultural income, so the deduction claim failed.

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Issues: Whether remuneration paid to directors was allowable as a deduction under section 5(j) of the Agricultural Income-tax Act, 1950.

Analysis: The deduction claimed was founded on the specific plea that the payment had been authorised by a special resolution of the company, but that resolution, the related company records and the filing before the Registrar of Companies were not produced before the authorities. The appellate findings also showed that the details of payment to each director were not reflected in the audit report, the permissive clause in the articles did not provide specific amounts, and the expenditure was influenced by personal considerations rather than being incurred wholly and exclusively for earning agricultural income.

Conclusion: The remuneration was not an allowable deduction under section 5(j) of the Agricultural Income-tax Act, 1950, and the answer was against the assessee and in favour of the Revenue.

Ratio Decidendi: A claim for deduction of directors' remuneration fails where the assessee does not prove the authorising resolution and the payment is not shown to have been incurred wholly and exclusively for earning the income.

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