M.M.Dutt, J. - (1.) In this appeal, the appellant, Stadmed P. Ltd., has challenged the propriety of the judgment of Sabyasachi Mukharji J., whereby the learned judge has made the rule nisi obtained by the Commissioner, West Bengal-IV, Calcutta, on his application under Article 226 of the Constitution, absolute.
(2.) The appellant-company was an assessee under the Indian I.T. Act, 1922. For the assessment year 1961-62, the appellant claimed exemption from tax of the remuneration paid by it to its two joint managing directors, namely, Rs. 1,500 per month and commission calculated at 1% on the sales paid to Shri A. Das and Rs. 750 per month and a commission of 1% on sales paid to Smt. Sujata Saha. Having regard to the legitimate business needs of the appellant-company and the benefit derived by or accruing to it from the payment of remuneration to its managing directors, the ITO held that the allowable remuneration should be Rs. 750 per month for each of the said two managing directors. As regards commission, he held that 1% paid to Shri A. Das was reasonable, but there was no justification for the payment of commission to Smt. Sujata Saha. Accordingly, he completed the assessment for the assessment year 1961-62, under Section 23(3) of the Indian I.T. Act, 1922, hereinafter referred to as the Act. The appellant preferred an appeal to the AAC against the order of assessment of the ITO. The AAC raised the allowable remuneration in the case of Shri A. Das from Rs. 750 to Rs. 1,000 per month. As regards Smt. Saha, he agreed with the ITO that Rs. 750 per month would represent a reasonable remuneration in her case. However, he allowed for her a commission of 1/2% on the sales, whereas the ITO had allowed nothing in that regard. Being aggrieved by the said order of the AAC, the appellant preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal by its order dated February 24, 1971, inter alia, held as follows: "It, therefore, appears to us that the remuneration of Rs. 1,500 per month which has been claimed in respect of Shri A. Das is quite fair and cannot be considered to be either excessive or unreasonable within the meaning of that expression in Section 10(4A) of the Indian Income-tax Act, 1922. We would, therefore, direct that the remuneration paid to him be allowed in full. In so far as Smt. Sujata Saha is concerned the remuneration of Rs. 750 per month plus commission at 1/2% on sales, which has been allowed by the AAC is sufficiently liberal and no enhancement of the allowance is accordingly necessary. The ground relating to the remuneration paid to the joint managing directors is disposed of accordingly."
(3.) Being aggrieved by the said order of the Tribunal, the appellant made an application under Section 256(1) of the I.T. Act, 1961, on April 30, 1971, requiring the Tribunal to draw up a statement of case and to refer four questions of law arising out of the said order of the Tribunal. After hearing the appellant and the Department on the said application for reference, the Tribunal framed the following questions for reference to the High Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in applying the provisions of Section 10(4A) of the Indian Income-tax Act, 1922, to the case of the assessee and in disallowing Rs. 34,925 out of the remuneration and commission paid to one of the two joint directors, namely, Smt. Sujata Saha ?";