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2018 (12) TMI 104 - AT - Income TaxDisallowance of payment made to relatives of the Directors under section 40A(2)(b) - payment of salary paid has been treated as excessive by ₹ 6 lakhs - Held that:- AO has not pointed out any defect in the submission of the assessee. In our considered view the AO before comparing the salary with other directors, should have also considered experience, qualification and technical competency, which has not been done in the instant case. It is also the fact on record that the salary paid to Shri Shivendra Singh was taxed at the maximum marginal rate, meaning thereby both the assessee and Shri Shivendra Singh were being taxed at the same rate. Therefore, it can be concluded that there is no evasion of tax liability. We find that under similar circumstances in the case of PCIT Vs. Gujarat Gas Financial services limited [2015 (7) TMI 743 - GUJARAT HIGH COURT] has held that if salary paid to the specified persons mentioned in section 40A(2)(b) of the Act and same is charged to tax at the maximum marginal rate, then no disallowance can be made. - decided in favour of assessee. Addition in part on account of sales commission expenses - Held that:- From the preceding discussion, we note that the assessee has created the provisions for commission expense in the earlier years as evident from the copy of ledger available on page no.16 of the paper book. However, the accounts were settled with the party at ₹ 1,40,000/- during the year under consideration. Therefore the excess sum of ₹ 5,000/- was claimed as commission expenses for the year under consideration. On perusal of the ledger account of the commission, there remains no ambiguity that the provision for commission expenses of ₹ 1,35,000/- was not claimed as a deduction in the year under consideration as alleged by the ld.CIT(A). Once the expenses of ₹ 1,35,000/- has not claimed in the books of accounts, then there is no question making disallowance of such expenses. Therefore, we hold that the ld.CIT(A) has misunderstood the facts of the case and made disallowance of ₹ 1,35,000/- treating the same as provision for commission expenses. - decided in favour of assessee. Ad hoc disallowance at the rate of 25% of the total traveling expenses - Held that- it is clear that the AO has not pointed out any specific defects in the expenses claimed by the assessee. In these circumstances, we are of the view that the estimated disallowance is not sustainable in the eyes of the law. In this connection, we also rely on the order of Coordinate Bench of ITAT Kolkata in the case of Animesh Sadhu Vs. ACIT [2014 (11) TMI 1170 - ITAT KOLKATA]. Hence we delete the addition made by the lower authorities. Hence, this ground of appeal of the assessee is allowed.
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