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2014 (6) TMI 325 - AT - Income TaxDisallowance out of salary and commission paid services provided by the Directors to two companies - Expenses only for the purpose of business Held that:- The defence taken by the assessee company with regard to the disallowance was that the salary and commission given to the directors were within the limit prescribed under the Companies Act i.e. u/s 309 - the salary is disallowed by the AO on the basis that such expenditure was not debited to profit and loss account of its sister concern and is excessive or unreasonable while comparing with the assessee company and thus erred in adopting Premier Hollowers as yardstick. The rendering of has not been denied at any stage - the directors were also incurring the travelling expenditure to travel between the assessee company and M/s Premier Hollowers Pvt s office - it is a matter of fact that the directors have rendered the services to M/s Premier Hollowers Pvt Ltd. and also no salary has been debited on account of remuneration payable to these directors in the books of account of M/s Premier Hollowers Pvt Ltd. - If it is so then those directors have also worked for M/s Premier Hollowers Pvt Ltd and salary paid to them cannot be said to be exclusively have been paid for the services rendered by them to the assessee company - the AO was right in proportionate allocation of salary paid to the directors on the basis of turnover of both the companies thus, there was no infirmity in the order of the CIT(A) Decided against Assessee.
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