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2019 (1) TMI 645 - AT - Income TaxDisallowance as bonus to director shareholders of the assessee company u/s. 36(1)(iii) - whether it is a dividend payment in disguise - Held that:- The partners are duly qualified and they have participated in the day to day affairs of the assessee company and payment of bonus is duly authorized by the Board Resolution. Taking all these facts into consideration, the bonus was paid in addition to salary as a reward for services rendered by the two directors to the assessee company and it was in no way related to their share holdings in the assessee company. Further, it also cannot be considered as a dividend payment in disguise. Having regard to their qualification & experience and participation in the management of the assessee company, the payment of bonus has been made as part of salary in terms of Board Resolution which was linked to the services rendered by them. Accordingly, it should be allowed as a deduction while computing the income of the assessee. This issue was considered by the judgments cited supra as per which, when bonus has been paid to the directors for the services rendered and as part of a payment of employment which is to be allowed u/s. 36(1)(ii) - Direct the AO to allow the claim of assessee for payment of bonus as deduction while computing the income of assessee. - Decided in favour of assessee.
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