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2017 (9) TMI 1520 - ITAT DELHIDisallowance of salary and advisory fees paid to the Directors u/s 40A(2)(b) - CIT-A deleted addition - Held that:- During the course of arguments, the ld. AR for the assessee contended that their salary was enhanced as the company has earned more profit during the year under assessment. But this contention is not sustainable for the reason that the salary of a person cannot be based upon losses and profits of the company but it needs to be commensurate to the nature of their work, qualification and services rendered. Despite the fact that there was not an iota of material before the ld. CIT (A) to objectively come to the conclusion that their salary / fees have been rightly increased to the tune of 250% to 300%, the addition has been deleted. We are of the considered view that AO has objectively thrashed the issue by enhancing the salary/fee of the directors by 25% to 30% and CIT (A) has erred in deleting the addition on the basis of conjectures and surmises. So, in these circumstances, we hereby allow the appeal filed by the Revenue.
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