Law:

Section:

Section 37(1) of the income-tax act, 1961-Business expenditure-Three of directors of assessee-company were doing extra work for company since year 1943 without accepting any remuneration till assessment year 1967-68 though articles of association of assessee-company prescribed that a director performing extra services shall be paid remuneration-In accounting year relevant to assessment year 1968-69 general body of shareholders passed resolutions fixing remuneration of said directors for extra work in assessment years 1967-68 and 1968-69 respectively-resolution allowed facilities of residential accommodation, car, telephone, etc., and benefits of provident fund and gratuity and stipulated termination of services on six months' notice on either side-Whether directors concerned were salaried employees of assessee-company and, therefore, assessee-company was entitled to deduction of remuneration paid to them, as well as contribution made to provident fund, etc.-Held, on facts, yes-Whether liability to pay impugned remuneration and contribution to provident fund, etc., arose by virtue of resolution passed during accounting year relevant to assessment year 1968-69 and, therefore, entire such expenditure was allowable in assessment year 1968-69 even though it related to the assessment year 1967-68 as well as 1968-69-Held, yes Facts Three of the directors of the assessee-company had been holding that position since 1943 and also doing extra work for the company, but they did not accept any payment till the assessment year 1967-68, although the articles of association of the company provided that a director performing extra services shall be paid remuneration. Subsequently, by resolutions passed, during the accounting year relevant to the assessment year 1968-69, on 29-9-1967 and 22-1-1968, the assessee decided to pay certain sums as remuneration to the said directors for the assessment years 1967-68 and 1968-69 respectively. The relevant resolutions, in addition to fixing the salary of the directors, allowed them the benefit of participation in the company's provident fund scheme and annuity-cum-gratuity scheme, rent-free furnished accommodation, motor car facility,…

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