TMI Blog2011 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... eal disposed off. - ITA No.411 of 2011 - - - Dated:- 18-11-2011 - A.K. SIKRI, J. Mr. R.M. Mehta, Advocate. For Appellant Mr. N.P. Sahni, Sr. Standing Counsel. For Respondent A.K. SIKRI MR. JUSTICE SIDDHARTH MRIDUL JJ. 1. The present appeal seeks to challenge the order dated 30.4.2010 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') for the assessment year 2006-07. Briefly stated, the appellant/assessee is into the business of providing CAE/design services to various customers in Indian and abroad. It is the case of the assessee that the assessee company was started by four persons, who were also its Directors, viz., (i) Mr. Ambuj Sharma, who has a Master's degree in Mechanical Eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and Mr. S. Nakkeeran whereas the remaining disallowance of Rs.2,00,000/- was made out of the consultancy fee of Rs. 8,81,425/- paid to another Director, Mr. Ambuj Sharma. 5. The disallowance of Rs.12,50,000/- out of the consultancy fee paid to Mr. B. Sridhar and Mr. S. Nakkeeran, was made by the AO on two grounds: (i) That a salary of Rs. 4,80,000/- paid to the said two Directors (Mr. B. Sridhar and Mr. S. Nakkeran) was in addition to the consultancy fee; and (ii) That the assessee failed to produce professional degrees and income tax returns (ITRs) of the aforesaid two Directors, viz., Mr. S. Nakkeeran and Mr. B. Sridhar. Whereas the disallowance of Rs. 2,00,000/- out of the consultancy fee paid to Mr. Ambuj Sharma, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the said two Directors and requested the AO to call for the information directly from the said two Directors. But, the AO failed to make any enquiries in this behalf and made the disallowance without any basis whatsoever. 8. Before the CIT (A), the assessee had also produced degrees of both the aforesaid Directors and also placed copy of ITR of Mr. B. Sridhar, as the assessee had received the same by that time from the respective universities from where the Directors had passed out. Besides, the assessee also submitted that all the Directors were earlier working with the blue chip companies like, NIIT, Hero Honda, Mechanical Dynamics (USA) before joining hands and starting the assessee company on their own. It was also assessed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It reads as under: Whether the Tribunal was correct in law and on facts in upholding the order of the CIT (A) and the AO and confirming the disallowance of Rs.14,50,000/- of consultancy fees paid to the Directors under Section 40A(2)(b) of the Income Tax Act, 1961 on the ground that payment of consultancy fee was in addition to the payment of salary to the Directors when, in reality, only consultation fee was paid to the three Directors. 11. When this matter came up for hearing on 24.2.2011, submission for the learned counsel for the appellant was that the Tribunal had not considered various pertinent aspects and had also proceeded on wrong presumption. His entire thrust, therefore, was that the matter be remitted back to the T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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