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2021 (8) TMI 942 - AT - Income TaxAddition u/s 36(1)(ii) - payment of incentive to the Chairman and Managing director - CMD having substantive share holding - AO proceeded to disallow the same u/s. 36(1)(ii) on the premises that the same is distribution of dividend in the guise of incentive - HELD THAT:- As observed that other shareholders-cum-directors have not been paid any dividend/incentive during the year. Dividend is usually a return on the investment made by a person. However, in the present case, the incentive has been paid to Shri Rustom Joshi only for the services rendered by him and not a return on the investment made by him. If it was a dividend which was paid in the name of incentive, similar payments would have been made to the other shareholders of the company. However, this is not the case. The allegation of Ld. AO that there was violation of the provisions of The Companies Act, is not supported by any concrete material on record. The allegation of Ld. AO that dividend was being paid in the guise of incentive, has no legs to stand since the assessee has substantiate the fact that incentive was paid only against services rendered by Shri Rustom Joshi. Therefore, the additions have rightly been deleted. - Decided in favour of assessee.
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