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2021 (1) TMI 841 - HC - Income TaxAddition u/s 40A(2) - remuneration paid to the Managing Director nearly 90% of the returned income of the assessee company - MD’s physical presence was only 15 days in the year and when the Managing Director was not aware of the existence and termination of agreement in favour of SEL wherein huge payments were made by the assessee company - CIT-A and Tribunal deleted addition on the ground that the Managing Director is directly responsible for the business of the company an in fact, has brought the sale from Italy and other European countries and therefore, is entitled to remuneration - HELD THAT:- CIT (Appeals) as well as the Tribunal have completely failed to establish that no material was produced by the assessee to demonstrate that the Managing Director had secured the business of the company from Italy and other European countries. The provisions of Section 40A(2) which are applicable to the fact situation of the case have also not been taken into account by the CIT (Appeals) as well as the tribunal. We deem it appropriate to quash the order passed by the Commissioner of Income Tax (Appeals) and the tribunal and remit the matter to the CIT (Appeals) to decide the appeal afresh by taking into account the provisions of Section 40A(2) of the Act and the fact that the assessee had failed to adduce any material to show that the Director of the company had procured business for the company from Italy and other European countries. Decided in favour of revenue by way of remand.
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