Weighted deduction and director salary ceiling: non-qualifying expenses were denied relief, and medical reimbursement was included as salary.

Weighted deduction under section 35B(1)(b) was denied for interest on packing credit, certificate of expense and inspection agency fees because those items did not fall within the qualifying statutory categories. Reimbursement of medical expenses paid to a director-cum-employee was treated as a benefit or amenity and therefore included in salary for the ceiling under section 40(c), read with section 40A(5). The assessee's claim failed on both issues, and the assessment disallowance and inclusion were sustained.

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Issues: (i) Whether weighted deduction under section 35B(1)(b) of the Income-tax Act, 1961 was admissible in respect of interest on packing credit, certificate of expense and inspection agency fees. (ii) Whether reimbursement of medical expenses was to be included in computing the ceiling under section 40(c) of the Income-tax Act, 1961 in relation to a director-cum-employee.

Issue (i): Whether weighted deduction under section 35B(1)(b) of the Income-tax Act, 1961 was admissible in respect of interest on packing credit, certificate of expense and inspection agency fees.

Analysis: The claim was examined against the sub-clauses of section 35B(1)(b). The items claimed did not fall within any of the specified categories qualifying for weighted deduction.

Conclusion: Weighted deduction was not admissible on these items and the claim was rejected, against the assessee.

Issue (ii): Whether reimbursement of medical expenses was to be included in computing the ceiling under section 40(c) of the Income-tax Act, 1961 in relation to a director-cum-employee.

Analysis: Reimbursement of medical expenses was treated as part of the benefit or amenity extended to the director-cum-employee. On that basis, it was held to form part of the salary for the purpose of section 40(c), read with section 40A(5) of the Income-tax Act, 1961.

Conclusion: The reimbursement was includible in the computation under section 40(c), against the assessee.

Final Conclusion: The appeal failed in entirety, and the disallowance and inclusion made in assessment were sustained.

Ratio Decidendi: Amounts not falling within the specified categories in section 35B(1)(b) do not qualify for weighted deduction, and reimbursement of medical expenses paid to a director-cum-employee is includible as part of salary for the ceiling under section 40(c) when treated as a benefit or amenity.

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