Sen, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax (Central), Calcutta, Messrs. Turner Morrison & Co. Private Ltd., of 6, Lyons Range, Calcutta-1, the assessee, was assessed to income-tax for the assessment year 1962-63. The relevant previous year corresponding to the said assessment year 1962-63 is the calendar year, 1961. The Income-tax Officer in. making the assessment disallowed a sum of Rs. 1,75,000 out of the sum of Rs. 3,91,150 claimed by the assessee as having been paid as directors' remuneration. The Income-tax Officer held that such payment to the extent of the said sum of Rs. 1,75,000 was excessive and unreasonable.
(2.) Further, the assessee had paid a sum of Rs. 6,826 as contribution to a provident fund in East Pakistan where the assessee carried on business during the said assessment year. This provident fund was recognised by the Pakistan authorities but not by the Indian revenue authorities. The assessee claimed a deduction for the said sum of Rs. 6,826, which was disallowed by the Income-tax Officer.
(3.) On appeal, the Appellate Assistant Commissioner held that the Income-tax Officer was not justified in disallowing the said sum of Rs. 1,75,000 out of the directors' remuneration and deleted such disallowance. The Appellate Assistant Commissioner further directed the Income-tax Officer to allow the said sum of Rs. 6,826 contributed to the provident fund in Pakistan after satisfying himself that such fund was constituted under an irrevocable trust,;