RAJESH BINDAL, J. - (1.) BY this order, we shall dispose of two references bearing IT Ref. Nos. 102 and 103 of 1992.
(2.) THE Income -tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short "the Tribunal") vide its common order of law under s. 256(1) of the IT Act, 1961 (for short "the Act") for the asst. yr. 1981 -82 for the opinion of this Court : In ITR No. 102 of 1992 "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that, although the provisions of s. 40(c) are specific, the provisions of s. 40A(5) are applicable for the purpose of disallowance out of director's remuneration ? 2. Whether on the facts and circumstances of the case, the Tribunal was right in treating the amount of commission paid to the director and the amounts of rent, electricity, water and fuel bills paid the director as forming part of the remuneration for the purpose of disallowance under s. 40A(5)/40(c) - In ITR No. 103 of 1992 "Whether on the facts and circumstances of the case, the Tribunal was right in law in allowing deduction under s. 80HH of the IT Act, 1961 before deducting investment allowance which is itself against the provisions of s. 80AB of the IT Act, 1961 - ITR No. 102 of 1992
(3.) IN this reference, the dispute is with regard to disallowance of the remuneration paid to the director. An amount of Rs. 12,000 was paid as commission to the Executive Director, Shri S.L. Sehgal and was said not to be a part of remuneration within the meaning of s. 40A(5) of the Act. As per the assessee, the payment of commission should not be considered for taking the overall limit of remuneration at Rs. 72,000. Further, as per the assessee, the amount of rent, electricity, water and fuel bill did not form part of remuneration within the meaning of s. 40A(5) of the Act and no disallowance could be made on account of the same. The assessee case of Vardhman Spinning & Genl. Mills Ltd. vs. ITO (1987) 27 TTJ (Chd) 38, whereby it was held that for determining the disallowance out of the remuneration, etc., paid to the directors, s. 40(c) of the Act was relevant. The CIT(A) rejected both the contentions of the assessee and held that the company would be entitled to a deduction of Rs. 72,000 per annum in respect of salary remuneration paid to its directors under sub -s. (5)(a) of s. 40A of the Act. It was also held that since the assessee's case is covered under s. 40A(5) of the Act, the amount of rent, electricity bill, water bill and fuel bill would be treated as perquisite in the hands of the director. The computation of the total salary as made by the IAC(A) was correct. The Tribunal also agreed with the findings recorded by the CIT(A).;