1997 (11) TMI 40

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....The question of law that is referred at the instance of the assessee by the Income-tax Appellate Tribunal, for the assessment year 1978-79 under section 256(1) of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), reads as under : "Whether, on the facts and in the circumstances of the case, the commission paid to the director could be regarded as remuneration within the mean....

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....ommission and, therefore, the amount was not liable to be included in determining the ceiling prescribed under section 40(c) of the Act. The Income-tax Officer, however, rejected the claim of the assessee on the ground that what was paid by the company to the director was remuneration and limited the allowance of the expenditure by invoking the provisions of sub-clause (i) of clause (c) of section....

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....thin the scope of sub-clause (i) of clause (c) of section 40 of the Act. He submitted that the Bombay Tribunal has taken a view that the commission paid to a director cannot be the subject-matter for disallowance under section 40(c) of the Act. Mr. C. V. Rajan, learned counsel for the Revenue, on the other hand, submitted that the commission paid is in fact a remuneration paid to the director a....

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....partake of the character of salary. The Supreme Court also held that the salary can be fixed on the basis of time spent in service or on the basis of work done or partly by the time spent in service and partly by the work done. The decision of the Supreme Court makes it clear that whatever may be the basis for fixing the remuneration, the remuneration was paid to the director for services rendered....