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Section 40A(5) of the Income-tax Act, 1961 - Business disallowance - Remuneration, etc, paid in excess of prescribed limits in case of company Concessional rate of interest charged in borrowings from managing director is not a perquisite and is not a subject to disallowance to section 40A(5)/40A(6). [A.Y. 1979-80] CASE REVIEW CIT v. Vazir Sultan Tobacco Co. Ltd.[1998] 173 ITR 290 (AP), Indian Oxygen Ltd. v.CIT[1994] 210 ITR 274 (Cal.) followed. CIT v. Continental Construction Ltd.[1998] 230 ITR 485 (SC) followed & relied upon. JUDGMENT M.M. Kumar, J. - This order shall dispose of I.T.R. Nos. 82 of 1989, 64 of 1992, 18 and 19 of 1993 as identical questions of law have been raised. The controversy in the present bunch of references has emerged out of the orders passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity, "the Tribunal", in the following cases: Sr. No. I.T.R. No. Tribunal's order dated Arising out of Assessment year 1. 82 of 1989 (CIT v. Ess Ess Kay Engg. Co. (P.) Ltd., Kapurthala 7-5-1987 I.T.A. No. 30/ASR/1987 1981-82 2. 64 of 1992 (CIT v. Ess Ess Kay Engg. Co. (P.) Ltd., Kapurthala 14-9-1990 I.T.A. No. 263/ASR/1990 1979-80 3. 18 and 19 of 1993 (CIT v. Ess Ess Kay Engg. Co. (P.) Ltd., Kapurthala 21-9-1992 I.T.A. No. 704 and 705/ASR/1987 1982-83 and 1983-84 The common questions of law, which have arisen in these references are as under: "1.Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in deleting the disallowance made representing value of perquisite of concessional rate of interest charged on borrowings from managing director (Rs. 29.610) and meeting fees (Rs. 2,400) which are clearly hit by the proviso to section 40A(5)/40A(6) of the Income-tax Act, 1961 ?" 2.Whether, on the facts and in the circumstances of the case and keeping in view the provisions of section 40(c)(A) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal is right in law in holding that the amount of Rs. 2,400 being the director's meeting fee over and above the total emoluments of the director amounting to Rs. 72,000 is allowable ?" In order to put the controversy in proper…

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