Tribunal upholds director remuneration, remits Provident Fund issue for further verification.

The Tribunal allowed the appeal partially, upholding the enhanced remuneration claim for whole-time directors as the liability crystallized during the relevant year, post-balance sheet date. However, the Provident Fund issue was remitted for further verification by the Assessing Officer regarding the remittance date. The disallowance of the remuneration and Provident Fund contribution was not sustained, with the Tribunal finding the enhanced remuneration justified post-approval.

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Issues:
1. Disallowance of provision made for remuneration of whole-time directors.
2. Sustenance of disallowance of Provident Fund remittance related to the above remuneration.

Analysis:
1. The appellant, engaged in civil engineering contracts, filed its return for the Assessment Year declaring income. The Assessing Officer noted a difference in remuneration claimed and approved for the Chairman and two Directors. The appellant argued that the remuneration was enhanced with Central Government approval, making it an ascertained liability. However, the AO disallowed the claim citing Companies Act provisions and a Supreme Court decision. The CIT(A) upheld the disallowance, stating the approval expired before the relevant year. The appellant contended that the liability crystallized during the year and should be allowed. The Tribunal agreed, noting the approval received post-balance sheet date.

2. The AO disallowed the enhanced remuneration and Provident Fund contribution, stating the liability crystallized later. The Tribunal found the enhanced remuneration justified post-approval and allowed the claim. However, it remitted the Provident Fund issue for verification of remittance date by the AO. Overall, the appeal was allowed partially, with the remuneration claim upheld and the Provident Fund issue remitted for fresh consideration.

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