- (1.) This is an IT reference under Section 256(1) of the IT Act in which the following question has been referred to us for our opinion : "Whether, on the facts and circumstances of the case, the Tribunal was legally justified to disallow Rs. 19,000 out of remuneration payable to Abdul Qayum Ansari and Abdul Quddus Ansari ?"
(2.) We have heard learned counsel for the parties.
(3.) The assessee is a company registered under Indian Companies Act which is engaged in manufacture and export of carpets. The relevant assessment year is 1978-79. The dispute in this case is about the increase of salary of two of the directors, Sri Abdul Qayum Ansari and Abdul Quddus Ansari, who were earlier paid salary of Rs. 1,595 per month each, but this salary was increased to Rs. 2,987 per month each w.e.f. 1st Jan., 1976. This increase in the salary of the two directors of the assessee-company was disallowed, in respect of which this present reference has been made. The IAC disallowed the claim of the assessee in respect of this increase of the salary of the directors. The CIT(A), however, reversed the order of the ITO and allowed the claim of the assessee. The Tribunal allowed the assessee's claim in part. The Tribunal disallowed Rs. 19,000 out of the remuneration instead of the disallowance of Rs. 23,688 by the IAC.;