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2012 (6) TMI 689 - AT - Income TaxDis-allowance u/s 40A(2)(a) - remuneration paid to Directors - dis-allowance of an amount of ₹ 30 lacs out of total salary of ₹ 36 lacs - Held that:- It is well settled that the provisions of section. 40A(2)(a) cannot have any application unless it is first concluded that the expenditure was excessive or unreasonable. In the instant case, there is nothing to suggest that the AO found the payment of remuneration to director excessive having regard to either (a) fair market value of the services or facilities; or (b) the legitimate needs of the business of the assessee; or (c) the benefits derived by or accruing to the assessee on receipt of such services or facilities. Hence, in absence of material on record to hold that payment of remuneration @ ₹ 3 lacs pm to the director was excessive or unreasonable, CIT(A) was justified in deleting the addition - Decided against the Revenue.
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