Judgment

Mrs. Sujata V. Manohar, J.-The appeals pertain to assessment year 1983-84. The following question of law was referred to the High Court for determination at the instance of the Revenue:

“Whether on the facts and in the circumstances of the case, the Tribu­nal was correct in holding that having regard to the provisions of Sections 40(c) and 40A(5)(b) of the Income-tax Act, the remuneration paid to the Directors in respect of their employment outside India has to be excluded from the limit of Rs. 72,000/- laid down in the first proviso to Section 40A(5)(a) as well as Section 40(c) of the Income-tax Act, 1961?”

Facts :

The respondent-assessee is a civil construction company which has executed a large number of projects outside India. Its overseas projects include irrigation and hydle projects in Libya, a fibre board factory at Abu-Sukhair in Iraq and the Karkh Water Supply Project, Baghdad which had a total value of 534 million dollars.

2. For the assessment year 1983-84, the assessment had paid a sum of Rs. 14,0074,570/ to its Directors as remuneration and commission. The Income-tax Officer disallowed a sum of Rs. 13,94,98,570/- being excess amount over the limit of Rs.72,000/- p