COMMISSIONER OF INCOME-TAX, KERALA vs ALAGAPPA TEXTILE (COCHIN) LTD.

The Supreme Court examined whether the remuneration paid to Kamala Mills Ltd. by M/s. Alagappa Textiles was allowable as business expenditure under Section 10(2)(xv) of the Income-tax Act, 1922. The Court held that the remuneration was not permissible as it violated Section 384 of the Companies Act, 1956, which prohibited the continuation of a body corporate as manager beyond six months from the Act's enforcement. Consequently, the Court upheld the disallowance of the deduction claimed by the assessee for the assessment years 1958-59 and 1959-60.