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2019 (4) TMI 1157 - ITAT MUMBAIDisallowance of excess remuneration - addition 40A(2)(b) - commercial expediency - remuneration to Managing/Whole Time Directors, in excess of the limits specified u/s 198 r.w.s. 309 of the Companies Act, 1956, for which approval of the Central Government is pending to be filed - non-compliance of transactions entered u/s 297 of the Companies Act - HELD THAT:- In the instant case, after the closure of the books and audit of accounts for the year ended 31.03.2011 (AY 2011-12), being the impugned year, the auditors noticed that the remuneration sanctioned by the EGM and paid to the Directors was in excess of the limits set out in Schedule-XIII of the Companies Act. The excess can be redone by an appropriate application to the Central Government u/s 309 of the Companies Act. Accordingly, the statutory auditors in their audit report vide para (g) made comments without quantifying in any manner the alleged excess. Further, we find that the entire excess which is paid by a valid resolution, sanctioning higher remuneration was repaid back to the company by a pro-tanto reduced remuneration for the subsequent 3 years. It shows that the payments made earlier and recovery later are within the four corners of law. There is no infraction of provisions of Income Tax Act. We delete the addition made by the AO - Decided in favour of assessee
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