Judgment :- JANARTHANAM, J. The assessee - Sundaram Fasteners Ltd., Madras, is a company, in which the public are substantially interested. The assessment year involved is 1982-83, for which the accounting year ended on March 31, 1982. While computing the income, the Inspecting Assistant Commissioner (Assessment) disallowed a sum of Rs. 21, 171 under section 40(c) of the Income-tax Act, 1961 (Act No. 43 of 1961 - for short "IT Act"). He made further disallowance under section 40A(5) of the Income-tax Act of a sum of Rs. 33, 083. On appeal, the Commissioner of Income-tax (Appeals) rejected the claim of the assessee and confirmed the disallowance made by the Inspecting Assistant Commissioner. On further appeal by the assessee, the Tribunal held that the reimbursement of medical expenses and club expenses could not be treated as perquisites, but, none the less, being cash payments, they are in the nature of remuneration or salary or profits in lieu of salary and, therefore, these amounts should be taken into account for working out the ceiling limit for the purpose of disallowance under section 40(c) or section 40A(5) of the Income-tax Act. It is, on the above facts, that the Tribunal, at the instance of the assessee, referred the question of law under section 256(1) of the Income-tax Act, as below, for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in treating cash payments like house rent allowance (HRA) paid, medical reimbursements and club subscriptions paid to managing director and executives as salary for the purpose of computing admissible perquisite for applying stipulated ceiling as per the provisions of sections 40(c) and 40A(5) of the Income-tax Act respectively ?" We are of the view that the question, as above, has been framed in a jumbled fashion without understanding the difference and distinction between the provisions adumbrated under sections 40(c) and 40A(5) of the Income-tax Act. Section 40(c) is relatable to any expenditure incurred by a company relatable to a director or to a person, who has a substantial interest in the company or to a relative of the director or of such a person, as the case may be, and such expenditure may result directly or indirectly in the provision of any remuneration or benefit or amenity to the categories of personnel, referred to above. Section 40A(5) is relatable to an expenditure incurred by the assessee by way of payment of any salary to an employee or a former employee or any expenditure incurred in the provision of any perquisite to such employees. To put it aptly and subtly in a nut-shell, section 40(c) is relatable to the director of a company, while section 40A(5) is relatable to an employee of the assessee-company. This apart, there is distinction of some significance between them. That is discernible by a cursory perusal of section 40(c)(i) and section 40A(5)(a)(i) and (ii) of the Income-tax Act. In section 40(c)(i) , the expenditure incurred directly or indirectly is referable to the provision of any remuneration, benefit or amenity to a director, etc., whereas in section 40A(5)(a)(i) and (ii), the expenditure incurred directly or indirectly is referable not only to the payment of any salary to an employee, etc., but also the expenditure incurred directly or indirectly in making provision of any perquisite, whether convertible into money or not, to an employee. Thus, it is discernible that in section 40(c)(i) there is an omission of any expenditure incurred directly or indirectly in making a provision of any perquisite, whether convertible into money or not in relation to a director of the company, etc. This sort of a distinction, the Tribunal omitted to take into consideration and that perhaps was the reason for framing of the question, as above, in a jumbled way.The assessee-company incurred expenditure for the assessment year in question relatable to house rent allowance and club subscription paid to the managing director or the executive of the company to the tune of Rs. 21, 171 the disallowance or otherwise of which came up for consideration before the assessing authorities, under section 40(c) of the Income-tax Act. The disallowance or otherwise of the medical reimbursement paid to the employees of the company to the tune of Rs. 33, 083 under section 40A(5) also attracted the attention of the taxing authorities. In view of what we have stated above, it goes without saying that the question, as framed above, requires to be reframed into two distinct and separate questions covering sections 40(c) and 40A(5) of the Income-tax Act, respectively. 33, 083 under section 40A(5) also attracted the attention of the taxing authorities. In view of what we have stated above, it goes without saying that the question, as framed above, requires to be reframed into two distinct and separate questions covering sections 40(c) and 40A(5) of the Income-tax Act, respectively. The reframed questions are as under : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in treating cash payment, like house rent allowance and club subscriptions made to the managing director and executives of the company as salary for the purpose of computing the admissible perquisites for applying the stipulated ceiling under section 40(c) of the Income-tax Act ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in treating cash payment made towards medical reimbursements of the employees of the company as salary for the purpose of computing the admissible perquisites for applying the stipulated ceiling under section 40A(5) of the Income-tax Act ?" The arguments of Mr. K. Vaitheeswaran, learned counsel representing Subbaraya Aiyar, Padmanabhan and Ramamani for the assessee and Mrs. Chitra Venkataraman, learned counsel appearing for the Revenue, were heard. We shall now enter into the arena, of discussion in finding out the answer to question No. (2).Our attention had been drawn to the case of CIT v. Mafatlal Gangabhai and Co. (P.) Ltd., in which an identical question, as the one arising for consideration in the instant case, arose for consideration before the Supreme Court, which, in turn, had the occasion to consider such question and find out an answer, by entering into a scintillating discussion. The question posed in that case before the Supreme Court is available at the relevant paragraph at page 650 and it reads as under : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the payment in cash of house rent allowance, conveyance allowance, medical reimbursement, etc., should not be treated as perquisite under section 40A(5) of the Income-tax Act ?" After elaborate discussion, the Supreme Court ultimately held that cash payments by an assessee to his/its employees do not fall within the ambit of section 40(a)(v) or section 40A(5)(a)(ii) of the Income-tax Act, as the case may be. On the face of the decision of the Supreme Court as above, it goes without saying that the second question has to be answered against the Revenue, by stating that the cash payments towards medical reimbursements made by the assessee to its employees do not fall within the ambit of section 40A(5) of the Income-tax Act and this question is answered accordingly. We shall now make an endeavour to find out an answer to question No. (1). This question is relatable to expenditure incurred by the company on two counts - one relating to payment of house rent allowance and the other relating to club subscription paid to the managing director of the assessee-company. No doubt true it is that the expenditure falling under section 40(c)(i) and (ii) shall in no case exceed the permissible limit prescribed in sub-clauses (A) and (B) thereto. Even the permissible limit of expenditure shall not be excessive or unreasonable in the opinion of the Income-tax Officer, having due regard to the legitimate needs of the company and the benefit derived by or accruing to it therefor.So far as the expenditure incurred by the assessee-company in relation to the payment of club subscription, of the managing director is concerned, there was no material, worth the name available, as pointed out by the Tribunal to show that the managing director was directed to become a member of the Gymkhana club for the purpose of the company's business. Becoming a member of a club by the managing director of the company may be for personal benefit of such director, in the sense of enjoying the amenities and facilities provided by the club, either in the form of recreation or sports activities. That sort of a membership may not be having any sort of correlation to the legitimate needs of the business of the company. As already pointed out, there is no material, worth the name, that the membership of the managing director of the company in Gymkhana club is having some sort of a correlation to the legitimate business needs of the company. In this view of the matter, we hold that the expenditure, incurred by the assessee-company by payment of club subscription to the managing director cannot fall within the permissible limit of the deduction prescribed therein. In this view of the matter, we hold that the expenditure, incurred by the assessee-company by payment of club subscription to the managing director cannot fall within the permissible limit of the deduction prescribed therein. So far as the house rent allowance is concerned, the taxing authorities, inclusive of the Tribunal, did not at all enter into any discussion as respects the expenditure incurred by the assessee-company for payment of house rent allowance to the managing director being excessive or unreasonable, having regard to the legitimate business needs of the company. In such state of affairs, there is no other go for us except to return this part of question No. (1) unanswered. This question is answered accordingly. The tax case is thus disposed of. There shall, however, be no order as to costs, on the facts and in the circumstances of the case.