Directors' remuneration fully deductible where no basis exists to apportion fees to exempt business income.

Directors' remuneration paid in British India was held deductible in full as a business expense in computing taxable income. The court found no agreement or statutory basis for apportioning any part of the fees to the exempt Gwalior undertaking, and the existence of exempt Gwalior income did not justify a proportionate disallowance. In the absence of a specific allocation, the directors' fees were treated as a single expense incurred in earning the company's income, so the attempted disallowance of a part of the deduction was not justified.

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Issues: Whether the whole of the directors' remuneration paid in British India was deductible as a business expense in computing taxable income, or whether a proportion had to be disallowed as attributable to the exempt Gwalior business.

Analysis: The remuneration was paid to directors acting as directors of the assessee-company at Calcutta and there was no agreement or statutory basis for apportioning any part of that remuneration to the Gwalior undertaking. The exempt income from Gwalior did not justify treating the directors' fees as partly referable to that business for the purpose of reducing the deduction from the assessee's gross income. In the absence of a specific allocation, the directors' fees were to be regarded as a whole as an expense incurred in earning the company's income.

Conclusion: The whole of the directors' remuneration was allowable as a deduction, and the proportionate disallowance made on the footing that part of it was attributable to the Gwalior income was not justified.

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