RANE MADRAS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee-company has kept a dispute as to eligibility of certain payments in excess of the limit under section 40(c) of the Income-tax Act, 1961 ("the Act"), alive on pleas which hardly require exercise of greater wisdom than ordinary for rejection. THE company claimed that a sum of Rs. 1,01,150 being the emoluments and perquisites to the managing director should be deducted as expenditure falling under section 37 of the Act. THE Income-tax Officer disallowed the expenditure in excess of Rs. 72,000, the limit as per section 40(c) of the Act. THE Commissioner confirmed the disallowance. THE company preferred an appeal before the Tribunal and urged that though sitting fees, reimbursement of medical expenses, provision for personal accident benefit, insurance, etc., to the managing director qualified for deduction under section 37 of the Act as expenditure falling under the head "Profits and gains of business or profession", the limitations under section 40(c)(i) and (ii) are not applicable to it.

(2.) THE Tribunal has said that the maximum expenditure admissible in the case of a managing director is Rs. 72,000 per annum and thus any amount in excess thereof was beyond the eligibility limit for deduction under section 37 of the Act.