Inadequate profits under sch v

Example:

Remuneration being paid to a director : Rs.10 lacs p.a.

Max. permissible remuneration to a single director : 5% of net profit

Hence company's net profit should be minimum : Rs.2 crores (10x100/5)

Actual net profit for the year is : Rs.50 lacs

Here we say that profit is inadequate to pay decided remuneration to the director.