TMI Blog2018 (1) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate satisfaction u/s.14A(2) of the Act. The assessee’s former substantive ground succeeds. Addition u/s 40(A)(2)(b) - Held that:- There is hardly any denial of the fact that the CIT(A) has followed his predecessors’ orders for assessment years 2008-09 to 2011-12. We notice in this factual backdrop that the above co-ordinate bench’s order has reversed the CIT(A)’s findings under challenge therein in partly affirming Assessing Officer’s identical action; although involving different amounts paid as remuneration to assessee’s Directors and other specified parties. Learned Departmental Representative is fair enough in not drawing any distinction on facts as well as law. We thus accept assessee’s latter substantive ground as well as its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 2008-09 to 2011-12 in order to compute the impugned disallowance under the newly introduced computation provision i.e. Rule 8D of the Income Tax Rules. Case records reveal that the assessee s appeals against the said corresponding disallowance stand accepted on 08.04.2016 and 14.09.2017. It has come on record that the said co-ordinate benches have deleted identical disallowances in earlier assessment years. We therefore follow consistency to delete the impugned disallowance for want of an appropriate satisfaction u/s.14A(2) of the Act. The assessee s former substantive ground succeeds. 3. The assessee s second substantive ground as well as Revenue s first substantive grievance arises against the CIT(A) s findings affirming Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Gujarat High court in CIT vs Bharat Vijay Mills Ltd. (1988) 128 ITR 633 (Guj.) has held that provisions of sec.40A have been declared to be of an overriding nature. The non obstante clause at the beginning of sec.40A(l) clearly indicates that if any other provisions exist somewhere on the statute book, they have to give way to clear the express provisions of Section 40A. 5.2.1 In view of the overriding provisions of sec.40A(2)(a), the payment of remuneration may be authorized by the deed of partnership, may also be in accordance with the terms of deed, and may further be within the ceiling limit as fixed by cl.v of section 40(b), in respect of aggregate amount of remuneration payable to the partners. If the amount of remuneratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... improvement or alteration in the services rendered by the directors towards the company. There has not been any substantial increase in the turnover of the company during the year under consideration either. However, the remuneration paid to the directors appears to be excessive and in my considered view, the same needs to be restricted as per the provisions of sec.40A(2) of the IT. Act. 5.2.3 This issue has been decided consistently by my predecessors as well in Asst. Years 2008-09, 2009-10, 2010-11 and 2011-12. In the earlier year i.e. Asst. Year 2011-12, remuneration of ₹ 4,40,64,000/- has been allowed to Shri K.H. Javeri. Considering the fact that there has been no substantial increase in turnover during the current year an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neration to assessee s Directors and other specified parties. Learned Departmental Representative is fair enough in not drawing any distinction on facts as well as law. We thus accept assessee s latter substantive ground as well as its main appeal ITA No. 3158/Ahd/2015. 5. The Revenue s substantive ground on the other hand seeking to revive the entire disallowance is rejected accordingly. 6. This leaves us with Revenue s latter substantive ground seeking to revive closing stock addition of ₹ 1,38,38,690/- as made by the Assessing Officer u/s.145A of the Act and deleted in course of lower appellate proceedings as follows: 6.2 I have considered the assessment order and the submissions made by the appellant. A perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the process of determining trading results but it can in no sense be regarded as source of such profit. The case of Chainrup Sampatram was also followed by the Hon'ble S.C. in the case of CIT vs Dynavision (2012) 76 DTR 351 (S.C). In this case it is held by Hon'ble S.C. that closing stock cannot be valued by including the element of excise duty when no such adjustment is made in opening stock. It has also been clearly held in the case of CIT v/s. Ahmedabad New Cotton Mills, 4 ITC 245, that when the opening and closing stock of business are both undervalued, if the method of alteration of both valuation is not adopted, it is perfectly plain that profits which is brought forward is not real one. In such cases, the real profits o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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