A. Raghuvir, C. J.: - This reference is made under Clause (1) of Section 256 of the Income-tax Act, 1961 with one question. The question reads as under : - "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the Appellate Assistant Commissioner refusing to allow the salary to the extent of Rs. 6, 000/- out of the remuneration paid to the Managing Director on proper construction of section 40 (c) of the Income-tax Act, 1961, relating to the assessment year 1972-73 ? The assessee in the case is an industrial estate M/S Pheros & Co. Private Ltd. at Gauhati. The Company has two factories, one at Gauhati and the other at Faridabad near Delhi which was established in 1971. In the two factories the estate forges steel sheets, iron nails, fencing posts, Steel Angles, steel joints and cast sheets. The question referred relates to assessment year 1972-73. The private company has only 4 share holders, one among them is F. C. Agarwal. He is the Managing Director. His spouse and their two daughters are three other share holders. The question relates to payment of remuneration to the Managing Director. In the preceding year the Managing Director was paid Rs. 2, 000/-per month or Rs. 24.000/- per year. In the relevant assessment year his guarantee commission was withdrawn. He was paid Rs. 3,000/- per month that is Rs. 36,000/-per year. The Income-tax Officer held enhancement of Rs.1000/-per month was not justified. The Appellate Assistant Commissioner held the second unit started at Faridabad was commenced by the Managing Director and sale proceeds of that unit was Rs. 78,605/-. The guarantee commission payable to the Managing Director was withdrawn therefore he held some Increment should be permitted. He allowed Rs. 500/-per month that is Rs. 6,000/- per year and he rejected the balance of Rs. 6,000/-. On further appeal the Appellate Tribunal confirmed the order in appeal. Aggrieved thereby at the instance of the assessee the above question is referred to this Court. We see there are only four share-holders of the assesses company. They are the Managing Director, his two daughters' and his spouse. During the assessment year 1966-67 net the profit of the private company was Rs. 43,343/. The remuneration paid to the Managing Director was Rs. 46,031/-. We see there are only four share-holders of the assesses company. They are the Managing Director, his two daughters' and his spouse. During the assessment year 1966-67 net the profit of the private company was Rs. 43,343/. The remuneration paid to the Managing Director was Rs. 46,031/-. In the assessment year 1967-68 the net profit was Rs. 28,805/- and the remuneration paid was Rs. 35,266/-. In the assessment year 1968-69 Rs. 40,226/- was the remuneration and the net profit was Rs.46,858/-. In the year 1969-70 the net profit was Rs.27,839/-. and the remuneration paid was Rs. 35,674/-. In the assessment year 1970-71 there was a loss of Rs. 4,319/-. The remuneration therefore paid was Rs. 24,000/-. In the assessment year 1971-72 the net profit was Rs. 10,876/-. The remuneration paid was Rs. 24,697/- Relevant to the assessment year 1972-73 the net profit was Rs.24,531/- and the remuneration piid was Rs. 37,292/-. The question on the above facts arises undsr section 40(c) of the Income-tax Act, whether having regard to the benefit that accrued to the company, the payment of remuneration to the Managing Director of Rs. 3,000/- per month or Rs. 36,000/- per year was or was not warranted. The next aspect of the question is whether payment of Rs. 36,000/- was excessive or unreasonable. Though we have stated the question in its three aspects, the question is whether it was justified on the facts to pay Rs. 36,000/- per year to the Managing Director. A large number of cases were cited in this case by the revenue as well the assessee. In the cases cited section 10(4A) of the 1922 Act which corresponds to section 40 clause (c) (i) of the 1961 Act, the provisions in the two statutes were considered. It is seen from the orders of the Income Tax Officer, Appellate Assistant Commissioner and also the Appellate Tribunal the whole aspect was considered from the perspecthe of profit and loss. This question in 118 ITR 752 (Calcutta Art Studio (P) Ltd. vs. Commissioner of Income-tax, West Bengal) was considered and held that the profit or loss is not at all relevant consideration under section 40 (c) (i) of the Act. In this regard the words - "the benefit derived by or accruing to it therefrom" is to be considered. This question in 118 ITR 752 (Calcutta Art Studio (P) Ltd. vs. Commissioner of Income-tax, West Bengal) was considered and held that the profit or loss is not at all relevant consideration under section 40 (c) (i) of the Act. In this regard the words - "the benefit derived by or accruing to it therefrom" is to be considered. The benefit derived or accrued to the Industrial estate is crucial as the amount paid is the remuneration for services rendered therefore huge profit in one year or huge loss suffered in another is not the determinative factor. Because there is a huge profit, remuneration or salary paid to the persons specified cannot be allowed as a matter of course. Similarly, no part of the remuneration or salary can be disallowed merely on the ground that the company has suffesed a huge loss in the accounting year. The synthesis of the subject made in the case we respectfully adopt as the correct criteria. Therefore it may not be proper to judge from the point of history of profits or loss whether remuneration paid was excessive or unreasonable. How then it is to be judged ? The authorities of the revenue should judge the reasonableness of the payment to a Managing Director from the point of service rendered and benefit accrued. We may here mention and agree with the Allahabad High Court in 148 ITR 710 (Kashiprasad Carpets (P) Ltd. vs. Commissioner of Income-tax, Allahabad) at page 713 wherein it is held the opinion as to the reasonableness or otherwise of the amcunt spent must be formed having regard to the legitimate business needs of the company and the benefit derived by the company or accruing to the company from the said sum expended. The Allahabad High Court made a significant observation at page 713-"excessiveness or unreasonableness contemplated in these sections could not be left to the subjective opinion of the Income Tax authorities". It is objective consideration of all the circumstances that should go into the verdict. We may now look into the case of 78 ITR 268 (Nund & Samont Co. (P) Ltd. vs. Commissioner of Income-tax Bihar & Orissa). In that case it was argusd striking an average for three years of the salary was also not proper. In what manner the excessiveness and reasonableness of the remuneration to be determined was later considered. We may now look into the case of 78 ITR 268 (Nund & Samont Co. (P) Ltd. vs. Commissioner of Income-tax Bihar & Orissa). In that case it was argusd striking an average for three years of the salary was also not proper. In what manner the excessiveness and reasonableness of the remuneration to be determined was later considered. The Supreme Court held that it is for the assessee to adduce evidence to show what was paid is justifiable and in that case no evidence was tendered by the assessee relating to the duties and services rendered by the Managing Director and the Deputy Managing Director or as to the special aptitude and qualifications of the two. There was no evidence adduced as to the legitimate business needs of the assessee or as to benefit derived or accrued to the Company. In another case 7/5 ITR 149 (Commissioner of Income-tax West Bengal vs Edward Keventer (P) Ltd.) the Supreme Court considered there were two producing centres. (This is the case where the Calcutta judgment in 86 ITR 370 (Cal) was corfirmed.) In that case it was shown four Directors were attending to the business of the as'sessee. There were two producing centres and several distribution centres. These aspects were considered for determining remuneration paid to the management personnel. We have considered the decisions and the test laid especially the one where producing centres and quantum of work involved was considered. We hold those are the two relevant circumstances which should be taken into consideration for purposes of the case in hand. The Managing Director in the instant case it is seen had established in 1970 another factory at Faridabad apart from one at Gauhati and sales in the former factory were Rs. 78,605/-for the relevant assessment year. Among the four share-holders the Managing Director alone is a male member and others are his two daughters and his wife. The profit which resulted in establishing another factory at Faridabed was due to the efforts of the Managing Director. Having regard to the distance between Gauhati and Faridabad the efforts in establishing a factory and also having regard to sale proceeds we hold that because of the efforts of the Managing Director benefits accrued to the private company and payment made by the company towards the remuneration of Rs. 36,000/-per year to the Managing Director is not excessive or unreasonable. 36,000/-per year to the Managing Director is not excessive or unreasonable. The rejection of Rs. 6,000/- by the Appellate Tribunal was not proper. For the aforesaid reasons we answer the question in the negative in favour of the assessee and against the revenue. No costs.