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2017 (1) TMI 950 - AT - Income TaxNature of amount paid by the company to the director - temporary advances or salary - AO observed that initially the payments were received as salary and later on surrendered or foregone - Held that:- If one has to look at the payments dehors the said explanation available to the Assessing Officer, no other feature is present which could justify the characterization of the said amount as salary. Firstly, the payments have been made on varying dates between 21/06/2010 to 21/03/2011. Secondly, even the amounts vary and the payments have not been subject to any tax deduction at source, which would normally the position if the payments were in the nature of salary. Thirdly, there is no material to suggest that any Board of Director’s resolution was available permitting the company to pay salary to the assessee -director. In fact, before the CIT(A) assessee referred to a resolution passed in the meeting of the Board of Directors of the company dated 25/04/2011, which approved the salary payment to the assessee-director for the financial year 2011-12, which corresponds to the next assessment year. In this manner, assessee sought to point out that so far as instant year is concerned, there is no resolution of the Board of directors of the company authorizing the payment of salary to the assessee-director Assessing Officer has been overtly influenced by the explanation of the representative of the assessee without appreciating attendant facts, which clearly show that the impugned amount could not be construed as payment of salaries by the company to the assessee-director. Therefore, the income tax authorities have erred in adding a sum to the income of the assessee as salary. - Decided in favour of assessee
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