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2019 (1) TMI 1081 - AT - Income TaxDisallowance on account of Director’s commission/bonus - addition under provisions of Section 36(1)(ii) - Held that:- According to us, the section allowed deduction if the expenditure is on account of bonus or commission paid to an employee and for services rendered. Such sum would not even otherwise payable as profit or dividend. Assessee being newly incorporated, had recruited employees from other organisations based on educational qualifications and based on experience of such employees, which we have already narrated above. It is a fact that assessee has agreed to pay bonus only to its employees for the year under consideration to their continued employment and Shri Suresh Prabhala rendered services for the assessee and assessee in lieu of that has paid bonus in the month of January, 2009. Shri Suresh Prabhala was not a shareholder when the bonus/commission was paid to him and once he is not a shareholder and commission/bonus paid for the services rendered, the provisions of Section 36(1)(ii) mandates that the bonus is to be allowed. Admittedly, this bonus is not out of the earlier years’ accumulated profits. Hence, we confirm the order of CIT(A) and this issue of Revenue is dismissed.
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