TMI Blog2012 (6) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... ity to rebut the evidence taken on record. Since no opportunity was given to the AO, therefore, order is set aside on this issue and issue restored to the file of the Assessing Officer for readjudication. - IT Appeal Nos. 1389 (Delhi) of 2009, 2648 (Delhi) of 2010 and 425 (Delhi) of 2011 - - - Dated:- 25-5-2012 - G.D. AGRAWAL, RAJPAL YADAV, JJ. ORDER Rajpal Yadav, Judicial Member In this bunch of three appeals, ITA No. 452/Del/2011 in assessment year 2006-07 is directed at the instance of revenue against the order of Learned CIT(Appeals) dated 18.11.2010. Whereas, in assessment years 2005-06 and 2007-08, assessee is in appeal against the orders of Learned CIT(Appeals) dated 13.2.2009 and 31.3.2010 respectively. The major common issue involved in all these appeals relates to allowability of the commission paid to Shri Sucha Singh, Managing Director of the company under section 36(1)(ii) of the Income-tax Act, 1961. In the appeals of assessee, this is the only issue involved, whereas in the appeal of revenue apart from this issue, two more grounds of appeal have been taken, which relates to allowance of depreciation on computer peripheral @ 60% and, deletion of Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is that turnover of the company in assessment year 2000-01 was Rs.837,17,395 and it increased to Rs.3112,09,597 in assessment year 2007-08. According to the Assessing Officer, assessee has not distributed the dividend from the very inception and the amount of commission paid to Sardar Sucha Singh could be paid as a profit or dividend income as per section 36(1)(ii) of the Act. Hence, the amount cannot be allowed to the assessee as a deduction. Dissatisfied with the disallowance, assessee carried the matter in appeal before the learned first appellate authority. In assessment years 2005-06 and 2007-08, learned Commissioner has upheld the disallowance. However, in assessment year 2006-07, Learned Commissioner has deleted the disallowance. The order of the Learned CIT(Appeals) in assessment year 2006-07 is subsequent to the orders passed in assessment years 2005-06 and 2007-08. Learned Commissioner has observed that commission paid to Sardar Sucha Singh was based on the Board's resolution passed in March 2003. There is a phenomenal increase in the turnover of the company and hence it was paid because of his contribution towards the better performance of the company. 5. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered would be allowed to the assessee. The second part exhibits the other condition that the deduction mentioned in the first situation could be allowed, if such sum would have not been payable to an employee as a profit or dividend meaning thereby if the amount of commission or bonus is receivable by an employee in the shape of profit/dividend then such commission paid to such employee would not be allowed as a deduction. 9. We have already noticed the shareholding pattern of the assessee. It is pertinent to observe that in the relevant year Sardar Sucha Singh was holding just 39.9% of the total shareholding and rest of the shares are being held by other individuals or by the company. Being a private limited company, controlled by the family members, a resolution approving the payment of commission to the working directors may not be very difficult task but whether this arrangement indicates that if this commission was not paid to the working director then it would be received in the shape of profit/dividend. If we look towards the shareholding pattern then only 39.9% of this commission paid would be paid to Shri Sucha Singh on the basis of the shares held by him. The other sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted. 13. In ground No.3, grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the addition of Rs. 20,06,234. The brief facts of the case are that assessee has debited a sum of Rs. 87,79,514 under the head "miscellaneous expenses". Assessing Officer has observed that in the immediately preceding year, assessee has claimed expenses of Rs. 47,66,865 under this head. There is an increase of 100% in the expenses. He directed the assessee to submit the details of all these expenses along with narrations exhibiting the nature of expenses, as well as supporting documents. Assessing Officer also directed the assessee to submit justification for incurring these expenses. Learned Assessing Officer has reproduced the details of expenses and observed that major expenses appear to be capital in nature. He disallowed a sum of Rs. 20,06,324 out of the total expenses. 14. On appeal, assessee moved an application for permission to lead additional evidence and placed on record details of expenditure along with evidence. Learned CIT(Appeals) issued notice to the Assessing Officer inviting his comments as to why additional evidence be not taken on record. Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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