GOVINDA BHAT, J. ( 1 ) THIS is a reference under 3. 256 (1) of the Income Tax Act, 1961, (hereinafter referred to as the Act'), made by the Income Tax Appellate tribunal, Bangalore Bench at the instance of the assessee and it relates to the assessment year 1966-67, for which the corresponding accounting year is the year ended with the 30th of June 1965. ( 2 ) THE question of law referred to this Court is:" Whether, on the facts and in the circumstances of the case, there was material available on record for the Appellate Tribunal to hold that an increment at the rate of Rs. 250 per month alone would be justifiable keeping in view the legitimate business needs of the asses see-company and the benefit derived by or accruing to the assessee company therefrom ? " ( 3 ) THE assessee is a private limited company engaged in the manufacture of packing tins. The shares of the assessee company are held substantially by the members of the Modi family. In the Board of Directors of the assessee company, there were three Modis; T. B. Medi, the Managing director, M. K. Modi, the Deputy Managing Director and A. C. Modi, the Deputy Managing Director. Prior to 1st of December 1964, T. B. Modi as the Managing Director was drawing a salary of Rs. 2,000 per month; M. K. Modi and A. C. Modi, the Deputy Managing Directors, were each drawing a monthly salary of Rs. 1,000. By a resolution of the board of Directors dated the 18th of December 1964, the salaries of the three Modis were increased with effect from 1st December 1964 and each of them was given an increment of Rs 500 month. Thus, the total increase in the salaries paid to the Managing Director and the Deputy Managing directors during the relevant accounting year was Rs. 10,500. ( 4 ) IN the assessment proceedings for the assessment year 1966-67, the assessee company claimed reduction of the entire salaries paid to the modis, under S. 40 (c) of the Act The Income Tax Officer disallowed the salary amounts to the exlent of the increments granted with effect from 1-12-1964, on the wound that the increments granted prior to 1-12-1964 had been allowed and that there was no justification for further increase in the remuneration sanctioned in December 1963 and January 1964. The Appellate assistant Commissioner disagreed with the view of the Income Tax officer. So far as the Managing Director and M. K Modi, one of the deputy Managing Directors, are concerned, he held that the entire salary paid to the said two Modis should be allowed as an item of expenditure under S. 40 (c) of the Act The assesses Company preferred "an appeal before the Tribunal aggrieved by the disallowance of a part of the salary paid to A. C Modi. The Department preferred a memorandum of cross objections. The Tribunal held that an increase in the remuneration at the rate of Rs. 250 per month in respect of each one of the Modis would be reasonable. The result of the order of 1he Tribunal was that the claim for reduction of the sum of Rs 5250 for the relevant accounting year was disallowed to the asssesee company. ( 5 ) S. 40 of the Act provides, what amounts shall not be deducted in computing the income chargeable under the head "profits and gains of business or profession". Clause (c) of the said section which applies in the case of companies only provides that the Income Tax Officer may disallow the whole or part of any expenditure incurred by the company which results directly or indirectly in the provision of any remuneration, benefit or amenity to the Director or a person who is substantially interested in the company or a relative of a Director or any such person, if in the opinion of the Income Tax Officer any such expenditure is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom. When the question of disallowance of expenditure in the case of a company comes up for consideration before the Income Tax Officer, he should form an opinion after taking into account the statutory criteria and all relevant circumstances and he should not be influenced by immaterial considerations. The statutory criteria are whether the expenditure or allowance is excessive or unreasonable having regard to (a) the legitimate business needs of the company and (b) the benefit derived by or accruing to it therefrom. The statutory criteria are whether the expenditure or allowance is excessive or unreasonable having regard to (a) the legitimate business needs of the company and (b) the benefit derived by or accruing to it therefrom. ( 6 ) THE question whether any amount claimed as expenditure or allowance is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom has to be decided on the fact? and in the light of circumstances of each case. But, the final conclusion on the admissibility of an allowance claimed is one of law. In considering whether the remuneration paid for services rendered by a Managing Director or a Deputy Managing Director is allowable under S. 40 (c), the Income Tax Officer must have regard to the statutory criteria referred to above and all the circumstances, such as, the nature and special character of the service, qualifications of the persons concerned for rendering service, amount, if any, paid by the assessee to another person for rendering similar service, normalcy of the remuneration having regard to the practice in the 1rade, existence of any other extraordinary and abnormal circumstances during the year in question, and the like. ( 7 ) THE order of the Tribunal discloses no ground to support their finding that the increase of salary at a rate exceeding Rs. 250 per month to each of the Modis was excessive or unreasonable. The discussion of the Tribunal in regard to this allowance is contained in paragraphs 9 and 10 of their order. When the Tribunal came to the conclusion that allowance to the extent of Rs. 5250 out of the claim of Rs. 10,500 should be allowed under S. 40 (c) of the Act, they were satisfied that a substantial portion of the expenditure claimed, on account of 'salaries' of the Managing Director and the Deputy Managing Director, was not excessive or unreasonable having regard to the legitimate business needs' of the company and the benefit derived by or accruing to it therefrom. When the Tribunal disallowed the claim to the extent of Rs. 5250, they should have given reasons for the conclusion that the expenditure claimed to that extent is excessive having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom. When the Tribunal disallowed the claim to the extent of Rs. 5250, they should have given reasons for the conclusion that the expenditure claimed to that extent is excessive having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom. ( 8 ) IN Commissioner of Income-tax, Bombay v. Walchand and Co. , (1967) 65 ITR. 381 SC. Shah, J. (as he then was) said:" The Tribunal without recording any reasoms partially disallowed the amount as a permissible deduction. It is necessary to emphasize that, though the Tribunal is not a Court, it is invested with judicial power to be exercised in manner similar to the exercise of power of an Appellate Court acting under the Code of Civil Procedure. Authority to "pass such orders thereon as it thinks fit" in S. 33 (4) of the Income Tax Act, 1922, is not arbitrary; the expression is intended to define the jurisdiction of the Tribunal to deal with and determine questions which arise out of the subject matter of the appeal in the light of the evidence, and consistently with the justice of the case. In the hierarchy of authorities the Appellate Tribunal is the final fact finding body; its decision on questions of fact are not liable to be questioned before the High Court. The nature of the jurisdiction predicates that the Tribunal will approach and decide the case in a judicial spirit and for that purpose it must indicate the disputed questions before it with evidence pro and con and record its reasons in support of the decision. The practice of recording a decision without reasons in support cannot but be severely deprecated. " ( 9 ) SRI S. R. Rajasekhara Murthy, the learned Counsel for the respondent, while not seriously disputing that the order of the Tribunal suffers from the infirmity of not giving reasons for the disallowance, urged that we should look into the materials and find out whether or not there was sufficient material for arriving at the finding. The difficulty in approaching the cpse in the manner urged, in the instant case is that the income Tax Officer has held that the entire salary attributable to the increase granted with effect from 1-12-1964 is excessive or unreasonable having regard to legitimate business needs of the company and the benefit derived by or accruing to it therefrom. The difficulty in approaching the cpse in the manner urged, in the instant case is that the income Tax Officer has held that the entire salary attributable to the increase granted with effect from 1-12-1964 is excessive or unreasonable having regard to legitimate business needs of the company and the benefit derived by or accruing to it therefrom. The Appellate Assistant Commissioner agreed with that view only with respect to A. C. Modi, but he allowed the claim in respect of the increased salaries paid to the Managing director and one of the. Deputy Managing Directors; thus 50 per cent of the deduction claimed is allowable according to the opinion of the Tribunal. They have not given any indication as to how they came to the conclusion that the sum of Rs. 5250 which was disallowed is excessive or unreasonable having regard to the statutory criteria and all the facts and circumstances of the case. This Court in answering a reference under s. 256 of the Act does not sit as a Court of Appeal. Its jurisdiction is only advisory. It is not possible for us to sit as a fact-finding authority. It is not possible to find out from the orders of the hierarchy of authorities below the basis for the finding sought to be sustained. ( 10 ) WE are of the opinion that the order of the Tribunal in so far as it relates to the disallowance of the claim made by the assessee company is defective in law. In the circumstances stated above, it is not possible for this Court to give any opinion on the question referred. Therefore, we decline to answer the question refrerred. In the circumstances, no costs. --- *** --- .