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2019 (2) TMI 1128 - AT - Income TaxDisallowance u/s 40A(2) - payment of remuneration to whole time directors - HELD THAT:- As decided in assessee's own case [2018 (11) TMI 1113 - ITAT MUMBAI] it is evident that the assessee had been showing loss continuously for past several years and the AO has also accepted loss shown by the assessee. That being the case, there cannot be any intention on the part of the assessee to evade tax by shifting profit. It is equally important to note that the remuneration paid to the directors have been offered by them to tax while filing their individual tax returns for the respective assessment years. This fact is evident from the copies of the income tax returns of the concerned directors filed before us by the learned Sr. Counsel. Not disputed that the concerned directors are assessed to tax at the maximum rate of 30%. We are of the considered view that the provisions of section 40A(2) of the Act are not attracted to the payment made to the directors. Thus we are of the view that the disallowance made under section 40A(2)(a) in the impugned assessment years are unsustainable. - Decided in favour of assessee.
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