Judgment :- K.A. THANIKKACHALAM, J. At the instance of the Department, the Tribunal referred the following question for the opinion of this court under section 256(1) of the Income-tax Act, 1961, hereinafter referred to as the "Act", for the assessment years 1975-76 and 1976-77. "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the disallowance towards the remuneration paid to Sri R. K. Swamy, the managing director of the company, should be regulated in terms of section 40(c) and not as per section 40A(5) of the Income-tax Act, 1961 ?" * The reference applications relate to the assessment years 1975-76 and 1976-77. For these two years, the Income-tax Officer made additions of Rs. 19, 164 and Rs. 19, 355 respectively in respect of the remuneration paid to the managing director, Shri R. K. Swamy, under section 40(c)(i) and (ii), read with section 40A(5) of the Act. On the assessee's appeal, the Commissioner of Income-tax (Appeals) held that the excess to be disallowed, if any, should be computed under section 40(c) of the Act, which applies specifically to directors and not with reference to section 40A(5), relying on the Gujarat High Court's decision in Addl. CIT v. Tarun Commercial Mills Ltd. 1978 (113) ITR 745, 1977 CTR(Guj) 141. Hence, the Commissioner of Income-tax (Appeals) remitted the matter back to the Income-tax Officer for recalculating the disallowance under section 40(c) of the Act. On the Revenue's appeal, the Tribunal upheld the Commissioner's direction on this point, following the decision in Addl. CIT v. Tarun Commercial Mills Ltd. 1978 (113) ITR 745, 1977 CTR(Guj) 141 (Guj) as also the decision of the Bombay Special Bench of the Tribunal in the case of Geoffrey Manners Ltd., in I. T. A. No. 1296/Bom of 1976-77, for the assessment year 1975-76, in which it was held that regarding the director-cum-employees, section 40(c) will apply and not section 40A(5) of the ActBefore us, learned senior standing counsel appearing for the Department submitted that in the present case, the provisions of section 40A(5) of the Act would apply, read with section 40(c)(i) and (ii) of the Act. According to learned senior standing counsel, the repairing charges borne by the employer are to be treated as perquisite in the hands of the employee-director. According to learned senior standing counsel, the repairing charges borne by the employer are to be treated as perquisite in the hands of the employee-director. Learned senior standing counsel further submitted that the Tribunal was not correct in directing the Assessing Officer to apply section 40(c) in the present case and find out the reasonableness in allowing the expenditure incurred by the employer towards its managing director We have heard learned senior standing counsel appearing for the Department and also learned counsel appearing for the assessee, who supported the order passed by the Tribunal. The fact remains that though the Tribunal in its order, gave certain findings with regard to certain items of expenditure incurred by the employer, it ultimately directed the Income-tax Officer to recompute the liability in accordance with section 40(c) of the Act, especially after finding out the reasonableness of the expenditure, if any, under section 40(c) of the Act. The Tribunal also directed that in such recomputation, the Assessing Officer may also deal with the issue about the apportionment of the rent between official and personal use of the managing director. The Tribunal also held that the repairing charges borne by the employer would amount to perquisite in the hands of the employee-director. In CIT v. Indian Engineering and Commercial Corporation P. Ltd. 1993 AIR(SC) 1540, 1993 (201) ITR 723, 1993 (2) JT 683 , 1993 (2) Scale 496 , 1993 (3) SCC 246 , 1993 (3) SCR 86 , 1993 (112) CTR 56, 1993 (68) TAXMAN 39, 1993 (2) TLR 503, 1993 (112) CTR(SC) 56, the Supreme Court held that "the employees concerned herein also happen to be directors. The provision in clause (c) of section 40 applies to directors among others. Of course, section 40(c) is applicable only to companies, whereas section 40A(5) is applicable to employees whether of companies or others. In the case of directors, who are also employees, both the provisions will be attracted the higher of the two ceilings has to be applied" In view of the abovesaid decision of the Supreme Court, we consider that there is no infirmity in the order passed by the Tribunal in the present case directing the Assessing Officer to recompute the liability in accordance with the provisions contained in section 40(c) of the Act. Accordingly, we answer the question referred to us in the affirmative and against the Department. No costs.