Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 138 - ITAT MUMBAIAddition of commission paid to director u/s 36(1)(ii) - the payments was more than other directors - CIT-A deleted the addition - HELD THAT:- We noted that the Alpesh Gandhi, is an executive director of the assessee company and is paid annual salary of 36 lacs along with variable component of commission computed at the rate of 15% of the net profit earned by the assessee company, which is paid in lieu of functions performed / services rendered. In this year the commission computed on profit was to the tune of ₹ 42,11,363/-. We noted that the variable component of commission was a part of remuneration package of the executive director as part of all shareholders. This variable commission is based on his performance evaluation and also considering his contribution in meeting the financial performance of the company. Alpesh Gandhi is a highly qualified person and detail of his qualification, functions performed and services rendered were filed before AO as well as before CIT(A). The sales of assessee company have increased by ₹ 2,15,92,232/- as compared to total sales of FY 2010-11 i.e. by 25.58%. The assessee company filed details that there is an increase in customer basis by 76 customers, where sales are more than of ₹ 50,000/- - out of increase in total sales of ₹ 2,15,02,232/- as narrated above the sales of ₹ 1,07,25,036/- i.e. almost 50% is from this new customers. It was contended that even the export sales have grown by 45.52%.There is substantial increase in profit before tax as compared to earlier and i.e. by 48.23%. In view of this facts, were are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. This issue of Revenue’s appeal is dismissed. Disallowances of interest u/s 36(1)(iii) - utilization of interest free funds in capital work in progress - HELD THAT:- noted that the assessee’s own capital i.e. interest free funds available as on 31.03.2012 is ₹ 5,30,46,131/- as against the investment made in capital work in progress at ₹ 2,32,02,581/-. Even non business investment is ₹ 36,49,657/-. It means that the assessee’s own interest free funds are more than the investment made in non-business investments. The CIT(A) has rightly deleted the addition. - Decided in favour of assessee Disallowance u/s 14A r.w Rule 8D - expenses relatable to exempt income - adjustment in book profit u/s 115JB - HELD THAT: -The assessee has earned the dividend income of ₹ 19,500/- and disallowance should be restricted to the extent of exempt income earned by assessee and this issue is squarely covered by the decision of Pr. CIT vs. Ballarpur Industries Limited [2016 (10) TMI 1039 - BOMBAY HIGH COURT] , wherein this issue has been considered and finally following the judgment of Hon’ble Delhi High Court in the case of Cheminvest Limited vs. CIT 2015 (9) TMI 238 - DELHI HIGH COURT] Wherein held that the provisions of Section 14A would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the AO that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income.” The provisions of section 14A r.w Rule 8D will not apply, where income is computed on the basis of book profit u/s 115JB as held by special bench of this Tribunal in the case ACIT vs. Vireet Investments (P.) [2017 (6) TMI 1124 - ITAT DELHI] Disallowance of PF and ESIC - beyond the respective due date u/s 36(i) (va) r.w.s. 2(24(x) - CIT(A) deleted the disallowance by noting the actual date of payment - HELD THAT:- We noted that the payments made by assessee on account of PF and ESIC is within the due date of filing of return of income u/s 139(1) , as is evident from the above chart. Hence, we are of the view that the issue is squarely covered by the decision of Hon’ble Bombay High Court in the case of CIT vs. Hindustan Organics Chemicals Ltd [2014 (7) TMI 477 - BOMBAY HIGH COURT]. As the issue is squarely covered as the payments made within the due date of filing of return of income we confirm the order of CIT(A). This issue of Revenue’s appeal is dismissed.
|