1986 (6) TMI 61

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....he company. Above payment was claimed as deduction on the basis of agreement dated 29-11-1975 entered by the company with the above director. Under sections 309(1) and 310 of the Companies Act, 1956, Government of India, vide its letter dated 13-12-1976, had considered payment of remuneration of Rs. 20,000 to this director as reasonable. The IAC (Assessment), therefore, considered payment in excess of Rs. 20,000 has not been for the business of the company and disallowed the same under section 40(c) of the Income-tax Act, 1961 ('the Act'). On appeal, above disallowance was maintained by the Commissioner (Appeals). Hence the appeal by the assessee. 3. Before us Shri G.B. Doshi, the learned representative of the assessee, furnished bio-dat....

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....ve, on the other hand, pointed out that section 309/310 was applicable to directors, including professional director, and when the Government of India approved remuneration of Rs. 20,000 only, any amount paid in excess of the above amount cannot be allowed as deduction in view of section 37 of the Act, and, therefore, amount beyond Rs. 20,000 was rightly disallowed by the Commissioner (Appeals). 4. We have heard the parties and considered the material placed before us. We do not agree with the arguments of the learned counsel for the appellant that for fixation of remuneration of a director other than a managing director or a director in the whole-time employment of company, section 309 has no application. After the changes made in the C....