Judgment :- N.V. BALASUBRAMANIAN, J. The two questions of law referred at the instance of the assessee relating to its assessment year 1976-77 are, "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the payment of commission to the managing director was remuneration for the purpose of section 40(c) of the Income-tax Act, 1961, and consequently excess over Rs. 72, 000 per annum was liable to be disallowed ? 2. Whether, on the facts and in the circumstances of the case, the managing director of the applicant should be considered as an employee of the applicant so as to bring the remuneration paid to the managing director within the scope of section 40A(5) of the Income-tax Act ?" The assessee is a private limited company and the relevant assessment year with which we are concerned is the assessment year 1976-77. The Income-tax Officer applied the provisions of section 40(c)(i) and (ii) read with section 40A(5) of the Income-tax Act and held that the commission paid to the managing director should also be taken into account in applying the provisions of section 40(c) or 40A(5) of the said Act, and the maximum allowable was Rs. 72, 000 and disallowed the sum of Rs. 2, 25, 662. The Commissioner of Income-tax (Appeals) held that the commission paid to the director cannot be regarded as part of the remuneration and the entire commission should be allowed as a deduction. On further appeal by the Department, before the Income-tax Appellate Tribunal, the Tribunal took the view that the commission should be taken into account for the purpose of, determining the ceiling under section 40A(5) or section 40(c) of the Act. On an application filed by the assessee, the Tribunal referred the two questions of law set out earlier for our considerationIn so far as the first question of law is concerned, it is fairly submitted by Mr. Ramakrishnan, learned counsel for the assessee, that the issue raised is covered by an unreported decision of this court in Tax Case No. 1136 of 1983, dated November 7, 1997 - since reported in Metal Powder Co. Ramakrishnan, learned counsel for the assessee, that the issue raised is covered by an unreported decision of this court in Tax Case No. 1136 of 1983, dated November 7, 1997 - since reported in Metal Powder Co. Ltd. v. CIT - wherein this court held that the commission was paid as of right under an agreement and it should be treated as part of the remuneration for the purpose of section 40(c) of the Act and will be subject to the ceiling limit prescribed thereunder. Following the said decision, we answer the first question of law in the affirmative and against the assessee. In so far as the second question of law is concerned, the issue raised in the question is whether the managing director can be regarded as an employee of the assessee-company or not. The Tribunal found that the managing director was an employee and the assessee had not placed any material to show that the managing director cannot be regarded as an employee within the meaning of section 40 of the Act. Further, we have seen that the provisions of sections 40A(5) and 40(c) of the Act have both to be applied for determining the ceiling to be allowed under the provisions of the Act and the higher ceiling limit would apply in the case of a director-cum-employee. If the managing director cannot be regarded as an employee, then the remuneration paid to him would be subject to the provisions of section 40(c) of the Act. In any event, the application of either of the provisions cannot be avoided. Therefore, the second question raised is purely academic in nature. Therefore, we answer both the questions of law in the affirmative and against the assessee. The Revenue is entitled to costs of a sum of Rs. 750.