Directors' remuneration under Table A can be valid where articles do not exclude it and payment is later ratified.

Table A of Schedule I applied to a company limited by shares unless excluded or modified by its articles, and where the articles did not exclude it, item 65 could support payment of directors' remuneration and expenses. The payment was also ratified by a company resolution, so it was not unauthorised merely because the articles did not contain an express clause permitting it. On that basis, the disallowance was held unjustified and the Tribunal was said to have been wrong in sustaining the Commissioner's revisionary order under section 263.

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Issues: Whether the Tribunal was justified in upholding the Commissioner's order under section 263 of the Income-tax Act, 1961, directing disallowance of directors' remuneration.

Analysis: Section 28 of the Companies Act, 1956 provided that the regulations in Table A of Schedule I apply to companies limited by shares unless excluded or modified by the articles of association. The company's articles did not exclude Table A, and item 65 expressly contemplated payment of directors' remuneration and expenses. The payment was also subsequently ratified by a resolution of the company, so it could not be treated as unauthorised merely because the articles did not contain an express clause in that behalf.

Conclusion: The disallowance was not justified and the Tribunal was wrong in sustaining the Commissioner's order under section 263. The answer was in favour of the assessee.

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