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2024 (4) TMI 931 - ITAT MUMBAIDisallowance of bonus paid to directors u/s 36(1)(ii) - assessee paid a bonus in addition to the remuneration to two of its directors - it is the plea of the assessee that both the directors are promoter directors of the company having a diploma in electronic engineering with 35 years of experience in the IT Industry and that both the directors are actively involved in the day-to-day affairs of the company and a bonus of Rs. 96 lakh each was paid for the services rendered by them and also because during the year under consideration, total turnover and sales turnover increased by 44% and 55%, respectively, as compared to the preceding year HELD THAT:- As directors had declared a salary of Rs. 60 lakh and a bonus of Rs. 35 lakh received by them. Thus, it is not a case wherein the bonus was received by the directors only in one year. Accordingly, we are of the considered view that the decision of the Special Bench of the Tribunal in Dalal Broacha Stock Broking (P.) Ltd.[2011 (6) TMI 251 - ITAT, MUMBAI] has been rendered in its own set of facts, which are completely different from the facts of the present case. Further from the financial statement of the assessee, we find that the turnover from the sale of products increased from Rs. 39.77 crore in the assessment year 2014-15 to Rs. 61.61 crore in the assessment year 2015-16. The aforesaid facts also distinguish the present case from the facts in Dalal Broacha Stock Broking (P.) Ltd. (supra), as in that case, it was noted by the Special Bench that the steady rise in performance was due to improved market conditions as the taxpayer was a stockbroker who was getting commission on sale/purchase of shares by the investor/traders. However, in the line of business of the assessee, wherein it is engaged in dealing in computers, networking solutions, and providing maintenance and facility management services, it cannot be denied that without the dedicated efforts turnover from sales and services cannot increase. Thus, aforesaid factors also support the case of the assessee that the bonus was a reward for the work of the promoter directors, who were actively involved in the day-to-day affairs of the company, in addition to the salary paid to them. Accordingly, in view of the aforesaid facts and circumstances, we are of the considered view that the assessee is entitled to claim deduction u/s 36(1)(ii) of the Act in respect of payment of bonus to its directors. Therefore, the impugned disallowance u/s 36(1)(ii) of the Act is deleted. As a result, ground no.1 raised in assessee’s appeal is allowed.
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