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2021 (3) TMI 1221 - HC - Income TaxDisallowance u/s 36(1)(ii) - Director's remuneration paid - commission to the Director shareholders disallowed - CIT-A deleted the addition as confirmed by tribunal - HELD THAT:- As decided in AMD Metplast Pvt Ltd [2011 (12) TMI 320 - DELHI HIGH COURT] Managing Director entitled to receive commission for services rendered to the company - It is a term of employment on the basis of whichhe had rendered service. Accordingly, he was entitled to the said amount. Commission was treated as a part and parcel of salary and TDS has been deducted. Ashok Gupta was liable to pay tax on both the salary component and the commission. Payment of dividend is made in terms of the Companies Act, 1956. Dividend has tobe paid to all shareholders equally. This position cannot be disputed by the Revenue. Dividend is a return on investment and not salary or part thereof. Herein the consideration in the form of commission which was paid to Ashok Gupta was forservices rendered by him as per terms of appointment as a Managing Director. - Decided in favour of assessee. Disallowance of deduction under section 801B(10) - CIT-A deleted the addition as confirmed by tribunal - HELD THAT:- As decided in Sanghvi and Doshi Enterprise [2012 (12) TMI 84 - MADRAS HIGH COURT] it is an admitted fact that the approval was granted for construction, both by the Chennai Metropolitan Development Authority and the local authority, namely, Chennai Corporation. The letter of the Chennai Metropolitan Development Authority according sanction to the project as early as 23.9.2003 clearly points out that the sanction was also subject to the approval by the Corporation. With the planning details being subjected to the approval by the Corporation as the competent local authority and it having certified as to the completion as early as 28.12.2007, we are satisfied that the completion being on or before 31.3.2008, the reliance placed on Explanation (2) to reject the assessee's case could not be sustained. In any event, given the fact that the approval, which is an administrative process, is purely at the hands of the Statutory Authority concerned, over which, the assessee could not have any control, the Explanation cannot, in any manner, have a negative effect on a factual aspect of the matter, namely, completion of the construction. Thus, in a case like this, where, the local authority, being the Corporation, had already certified about the completion of the project as per the approved plan, the fact that one of the Authorities, namely, Chennai Metropolitan Development Authority had issued a letter only on 13.6.2008, per se, cannot negative the assessee's claim for deduction - Decided in favour of assessee.
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