Srinivasa Iyengar, J.—The Income Tax Appellate Tribunal, Bangalore Bench, has referred the following question of law for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing Rs. 12,000 out of the remuneration of Rs. 72,000 paid to the managing director of the assesses company ?"

2. The matter relates to the assessment of M/s. International Instruments (P.) Ltd., Bangalore, for the assessment year 1972-73. N. Krishnan was the managing director of the company. The articles of association provided that he shall be the managing director of the company for a period that he shall be the managing director of the company for a period of 10 years from the time of incorporation of the company and thereafter for such period or periods as the directors may from time to time determine. This was provided under art. 35 of the articles of association. Article 37 provided that the remuneration of the managing director shall be fixed by the board of directors from time to time. It transpires that an agreement had been entered into in regard to the remuneration on December 9, 1960, and the period of the agreement expired