VIMAL GANDHI, J.M. This is appeal by assessee against order of CIT(A) dt. 19th Nov., 1983 for asst. yr. 1978-79. Only issue canvassed before us was disallowance of Rs. 17,784 paid as remuneration to professional Director, Shri Nalin Thakor, by company in period under consideration. sum of Rs. 37,784 was paid to above director for services rendered by him to company. Above payment was claimed as deduction on basis of agreement dt. 29th Nov., 1975 entered by company with above director. Under ss. 309(1) and 310 of Companies Act Government of India, vide its letter dt. 13th Dec., 1976, had considered payment of remuneration of Rs. 20,000 to this director as reasonable. IAC (Assessment), therefore, considered payment in excess of Rs. 20,000 as not being for business of company and disallowed same under s. 40(C) of IT Act. On appeal, above disallowance was maintained by CIT(A). Hence appeal by assessee. Before us Shri G.B. Doshi, ld. representative of assessee, furnished bio-data of Professional Director, Shri Nalin Thakor, list of his clients, copy of letter dt. 13th Dec., 1976 granting approval under s. 309(1)/310 of Companies Act and argued that in view of professional qualifications and standing of director amount of Rs. 37,784 paid to director could not be said to be excessive or unreasonable. He also brought to our notice copy of agreement dt. 29th Nov., 1975 made between company and director. According to ld. counsel, Government of India could only express its opinion regarding professional qualifications of director and could not fix his remuneration under s. 309(1)/310 of Companies Act. Approval letter dt. 13th Dec., 1976 fixing remuneration of Rs. 20,000 as reasonable could be taken only as piece of evidence along with other material for determining question whether remuneration paid to professional director was reasonable or not and could not be decisive piece of evidence for fixing remuneration. Shri Doshi also argued that s. 309 of Companies Act was applicable only to Managing Director or to Director, who is in whole time employment of company, and not to professional director as was case in hand. Shri Doshi also placed reliance on page 739 of Guide to Companies Act by A. Ramayya, Tenth Edition. In view of services rendered by Nalin Thakor to company as per agreement, remuneration of Rs. 37,000 and odd was reasonable by every standard and should have been allowed. Departmental representative, on other hand, pointed out that s. 309/310 of Companies Act was applicable t o directors, including professional director, and when Government of India approved remuneration of Rs. 20,000 only, any amount paid in excess of above amount cannot be allowed as deduction in view of s. 37 of IT Act and, therefore, amount beyond Rs. 20,000 was rightly disallowed by CIT(A). We have heard parties and considered material placed before us. We do not agree with arguments of ld. counsel for appellant that for fixation of remuneration of director other than managing director or director i n whole time employment of company, s. 309 of Companies Act has no application. After change made in Companies Act by Amendment Act, 1965 all directors of company are covered. This is quite evident not only from provisions of sub-s. (4) of s. 309, but also from Note on Clause of Bill introducing above amendment. Thus for monthly, quarterly or annual payment of remuneration approval of central government is necessary. In this case approval was specifically sought and was granted by Government of India vide letter dt. 13th Dec., 1976. Relevant extract of above letter are as follows ". . . Central Government is hereby pleased to express opinion under proviso to sub-s. (1) of s. 309 of Companies Act, 1956 that Shri Nalin Thakore, Director of your Company, has requisite qualification for rendering professional services to company in respect of income-tax assessments and appeal etc. For rendering professional service to company as aforesaid Shri Nalin Thakore shall be paid reasonable remuneration not exceeding Rs. 20,000 (Twenty thousand only) per annum, for period of three years with effect 29th Sept., 1975." Thus Nalin Thakor was approved as qualified for rendering professional services to company in respect of income-tax assessments and appeals. His remuneration payable was also approved at figure not exceeding Rs. 20,000 per annum. In view of above approval, company could not legally pay any amount exceeding Rs. 20,000 per annum to director. counsel for assessee also tried to make distinction between remuneration payable to whole time director or managing director on one hand to professional director on other. According to counsel, if remuneration in excess of limit prescribed is paid to former class, same is recoverable from them as per sub-s. (5A) of s. 309 of Companies Act but above sub-s. (5A) has no application in case of professional director. We do not agree with above submission as in above sub-s. (5A) words used are "any director" and not "whole time director or professional director". In our opinion, above sub-section is equally applicable to professional director. Thus payment made in excess of approved amount of Rs. 20,000 must be held to be payment made in violation of law and, therefore, cannot be treated as expenditure incidental to business. Thus payment connected with illegal transaction cannot be held to be payment connected with normal incident of business. In above circumstances, payment in excess of Rs. 20,000 cannot be allowed as permissible deduction. Authorities below, therefore, in our opinion were right in making above disallowance. Order of CIT(A) is, therefore upheld. In result, appeal is dismissed. *** WIPRO PRODUCTS LIMITED v. INSPECTING ASSISTANT COMMISSIONER OF INCOME TAX