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2018 (10) TMI 425 - AT - Income TaxDisallowance on account of excess claim of managerial remuneration - Held that:- As decide in assessee's own case the RBI Act, the Companies Act and the Income Tax Act operate altogether in different fields and the question whether the assessee is entitled to particular deduction or not, will depend upon the provision of law relating thereto and not the way, in which entries are made in the books of accounts. AO therefore was not bound under the Income Tax Act, 1961 to hold the alleged non-compliance of the ^provisions of Section 4(7) read with Section 198 of the Companies Act, 1956, as the sole ground for making disallowance of expenditure relating to managerial remuneration for computing the income of the appellant under the head profit and gains from business or profession' under the Income Tax Act, 1961, without citing the relevant provisions of the Act under which such disallowance was made. As held by me, the appellant did not commit any default u/s 43B, 40A(3), 40A(2)(b) and 40(a)(ia) and no adverse observation in respect to the various conditions prescribed u/s 37(1) were made by the Ld. AO, nor. Even though in my view the appellant company may be deemed as Public Limited Company under the Companies Act, 1956 and had made default under that Act, within the meaning of Section 198(1) read with Section 309, it could not be the sole reason for making disallowance of managerial remuneration for computing the taxable income of the appellant under the Income Tax Act, 1961. In view of the above, the addition made by the Ld. AO is deleted. - Decided in favour of assessee Addition on account of inflation of loss - Held that:- The Hon'ble Jurisdictional High Court in the case of CIT vs. M/s Triveni Engineering Industries Ltd.[2010 (11) TMI 90 - DELHI HIGH COURT] has time and again upheld that if the rates of taxation are uniform, it does not make a difference if a portion of income is taxed in either of the years as such exercise becomes revenue neutral. In appellant's case, the position is even in the favour of the appellant if such exercise of bifurcation of income is made. In considered view, there is no need of doing such exercise and the results shown by the appellant should be treated as perfectly in order. AO's action in making the addition is not justified and the same is directed to be deleted.- Decided in favour of assessee
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