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2017 (11) TMI 269 - HC - Income TaxAllowability of remuneration paid to the Executive Director - ITAT set aside the addition made on re-assessment of the fair market value under Section 37 as to the remuneration paid to the assessee’s Executive Director Shri Abhinav Kumar under Section 40A(2)(b) - Held that:- Hive Communication Pvt. Ltd. (2011 (7) TMI 82 - DELHI HIGH COUR ) has broadly indicated the correct approach to be adopted in such cases i.e. one of commercial expediency and the arms length to be adopted by the AO in evaluating claims by the assessee. This Court also notices that the Supreme Court ruling in Commissioner of Income Tax, West Bengal v. Edward Keventer Pvt. Ltd., [1978 (8) TMI 1 - SUPREME Court] is the primary judgment applicable in these cases. The direction of the AO’s enquiry appeared to have been to seek quantified justification as to the contribution of the individual in this case. The Court recollects the warning of the Supreme Court in S.A. Builders v. Commissioner of Income Tax, (2006 (12) TMI 82 - SUPREME COURT) that the AO’s rulings in such matters including commercial expenditure under Section 37 should not place matters in the arm chair of the assessee, or judge the merits or otherwise of a commercial transaction. In this case, the Court has no doubt that the AO did precisely that. No substantial question of law.
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