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2019 (5) TMI 1888 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - mandation of recording of satisfaction - HELD THAT:- Provisions of Section 14A(2) makes it abundantly clear that the Assessing Officer is empowered to compute the disallowance in accordance with Rule 8D of the Rules only if he is satisfied that the computation made by the assessee with respect to the expenditure incurred for earning exempt income s not appropriate or cannot be relied upon. Therefore it is mandatory for the AO to record such satisfaction as to why the computation made by the assessee is to be rejected. In the case of the assessee, it is apparent that the Ld.AO had not even ventured to examine the computation made by the assessee with respect to the expenditure incurred by the assessee for earning exempt income for all the relevant assessment years. Disallowance u/s.36(1)(ii) being commission paid to the Managing Director of the company - HELD THAT:- As decided in AMD METPLAST P. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [2011 (12) TMI 320 - DELHI HIGH COURT] Managing Director and in terms of the Board resolution is entitled to receive commission for services rendered to the company. It is a term of employment on the basis of which he 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. Managing Director 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 to be paid to 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 was for services rendered by him as per terms of appointment as a Managing Director. Thus addition made by the AD u/s 36 (1) (ii) is hereby deleted. - Decided in favour of assessee.
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