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2015 (11) TMI 294 - AT - Income TaxAddition on account of commission paid to the director - CIT(A) deleted the addition - Held that:- Assessing Officer has disallowed the commission paid to Shri Gautam Khandelwal, shareholder and director of the company on the ground that it is actually dividend. However, as recorded by the learned Commissioner (Appeals), Shri Gautam Khandelwal, is only 4.28% of the shareholder of the company and distribution of dividend, if at all, it is declared by the company would be very negligible, hence, it is hard to believe that for avoiding payment of distribution tax on such negligible amount of dividend, the assessee would have paid dividend to Shri Gautam Khandelwal in the garb of commission. Moreover, the assessee has produced material on record to show that commission payment is in terms with the terms of appointment and towards services rendered by the director. Nothing has been brought on record by the Assessing Officer to controvert the aforesaid claim of the assessee. That being the case, the disallowance of commission paid, in our view, is without any valid reason. Accordingly, finding no infirmity in the order of the learned Commissioner (Appeals) - Decided against revenue. Disallowance of plantation expenses - CIT(A) deleted the addition - Held that:- As could be seen the only reason on which the Assessing Officer disallowed the expenditure is it is of enduring benefit, hence, is a capital expenditure. Having held so, strangely enough, the Assessing Officer did not allow any depreciation. However, as could be seen from the submissions made by the assessee right from the assessment stage, the expenditure incurred was not merely for beautification of the factory premises but for Prevention of Pollution Control and Environment Safety. It is also evident, the assessee has to incur such expenditure as mandated by pollution control and environmental safety laws. It is also evident that the allegation of the Assessing Officer that such expenditure is not recurring in nature is without any basis as the learned Commissioner (Appeals) has recorded a finding of fact that the assessee had been incurring such expenditure from earlier assessment years and the Assessing Officer has allowed such expenditure fully. Considering the aforesaid facts and circumstances, we do not find any reason for disallowance of the plantation expenditure claimed by the assessee. Accordingly, we uphold the order of the learned CIT(A) - Decided against revenue.
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