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2015 (4) TMI 1318 - AT - Income TaxDisallowance u/s.36(1) (ii) being commission paid to the Managing Director of the assessee company - HELD THAT:- As decided in TRUE VALUE HOMES (INDIA) PVT. LTD. [2013 (3) TMI 858 - ITAT CHENNAI] CIT(Appeals) concluded that section 36(1)(ii) is not applicable to the payment made by the assessee to its managing director. CIT(Appeals) further, relying on the decision of Gestener Duplicators(P) Ltd. [1978 (12) TMI 1 - SUPREME COURT] held that the commission paid to Shri Ravichandran, the managing director of the assessee-company, is part of the salary. The only thing is that the commission has been paid on the basis of the turnover; but still the payment was in the nature of salary for services rendered by Shri Ravichandran. CIT(Appeals) also held that there is no force in the argument of the AO that no marketing efforts are necessary to sell the flats constructed by the assessee, as the assessee-company enjoys a very famous brand-name. CIT(Appeals) concluded that this finding is without any basis. As observed that even famous companies having valuable brand-names have to incur huge expenditure for marketing and there is no reason to hold that the assessee would get business without any marketing efforts. Disallowance made by the AO was not justified and accordingly deleted the addition - Decided in favour of assessee.
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