1. This is a petition filed by the petitioner under Section 256(2) of the I.T. Act, 1961, for direction to the Income-tax Appellate Tribunal, Indore Bench, to send the statement of the case and refer the following question of law to this court for its opinion :
'Whether, oh the facts and in the circumstances of the case, the ITAT was correct in law in allowing deduction of the commission paid to the four directors ?'
2. The short facts giving rise to this petition and relevant for the purpose of this petition may be stated, in brief, thus : the respondent is a private limited company and the matter relates to the assessment year 1979-80. The dispute relates to an amount of Rs. 37,659 as commission paid to the directors as per provisions of Section 40A(2) of the I.T. Act. The 1TO as also the appellate authority disallowed the sura of Rs. 25,113 on the ground that this sum had not been paid to the directors for services to the company. However, the Income-tax Appellate Tribunal relying on art. 20 of the memoradurn and articles of association of the company according to which it is provided that the directors shall also get a commission of 10 per cent. on the net annual profits of the company within the meaning of Sections 349 and 350 of the Companies Act, 1956, and the commission shall be divided amongst the directors in proportion to their shareholdings, allowed the claim in respect of this amount by setting aside the order of the ITO as also the CIT (Appeals).
3. According to the learned counsel for the Revenue, as four of the directors of the respondent-company resigned just four days before the expiry of the period of the accounting year in whose place two directors were co-opted on the last day, i.e., June 30, 1978, the four directors having not rendered any services personally, the Tribunal has committed an error of law in allowing that deduction.
4. On the other hand, the learned counsel for the respondent submitted that the ITO or the CIT (Appeals) did not have any objection regarding the 10 per cent. commission paid as such to the board of directors and they having not found that this expenditure is excessive or unreasonable, there was no valid justification by them to disallow deduction regarding the amount of commission paid to the four directors as that was a matter inter se between the directors. He, therefore, submitted that these being questions of fact and being not disputed, the Tribunal has rightly declined te refer the question of law as proposed by the Revenue on the ground that it being a question of fact, no question of law arises.
5. After hearing the learned counsel, we are of the opinion that considering the facts and circumstances of the case, no question of law as such is involved in the present case. Therefore, we see no valid ground to entertain this petition by calling upon the Tribunal to send the statement of the case and refer the question of law as proposed by the Revenue.
6. The petition is, therefore, dismissed with no order as to costs.