Where public companies or private companies which are subsidiaries of public companies made payment of remuneration to managerial personnel in excess of the limits prescribed in sections 269, 310, 311 and 387 and in terms of section 198(4) read with Schedule XIII to the Companies Act, 1956, which provides scales of remuneration (salary, dearness allowance, perquisites and any other allowance).
28 August 2013
I did read the same. However, I wanted to know what all is included in 'remuneration' and if exceeded how to obtain central government approval?
The remuneration includes pay, compensation, or reward for work, etc. The word remuneration is defined in the explanation appended to section 198 of the Companies Act. Accordingly, for the purposes of sections 198, 309, 310 and 311, remuneration shall include the following:— (a) any expenditure incurred by the company in providing any rent free accommodation, or any other benefit or amenity in respect of accommodation, free of charge, to any of the company's directors and manager; (b) any expenditure incurred by the company in providing any other benefit or amenity free of charge or at a concessional rate to any of the company's directors and manager; (c) any expenditure incurred by the company in respect of any obligation or service, which, but for such expenditure by the company, would have been incurred by any of the company's directors and manager; and (d) any expenditure incurred by the company to effect any insurance on the life of, or to provide any pension, annuity or gratuity for, any of the company's directors and manager or his spouse or child. Expenditure incurred on maintenance of vehicles would fall within the meaning of the expression 'remuneration' and once remuneration is fixed as provided under section 309 it is not possible to state that the expenditure incurred by the company on personal use of car by directors would not be allowable deduction. In so far as the company is concerned the expenditure is business expenditure, which could not be disallowed as such. [Sayaji Iron & Engineering Co. v CIT (2002) Comp Cas 675 (Guj)].
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