TMI Blog2012 (7) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable business expenditure - facts for are same - Therefore, appeals filed by the assessee are allowed - decided in favour of the assessee. - I.T.A. No.1296,1297 & 1298 /Del/2012 - - - Dated:- 1-6-2012 - SHRI R.P. TOLANI, AND SHRI T.S. KAPOOR, JJ. Appellant by : Shri Gopal Nathani, C.A. Respondent by : Smt. Anusha Khurana, Sr. DR. ORDER PER TS KAPOOR, AM: These are three appeals filed by the assessee against three separate orders of Ld CIT(A) dated 7..2.2011, 1.12.2011 and 5.3.2012 for assessment year 2006-07, 2007-08 2008-09 respectively. The grounds raised by the assessee for assessment year 2006-07 are as under:- 1. That the CIT(A) XV, New Delhi has grossly erred on facts and in circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board of Directors and enclosed a copy of such resolution and argued that the same was part of the salary and was not otherwise payable as profit or dividend. However, the Assessing Officer did not accept the submissions of assessee and added back the amount of bonus and commission of Rs.5,17,644/- on the basis that this is an amount which otherwise would have been payable to share holders as dividend and therefore he made addition under section 36(1)(ii) of the Income Tax Act, 1961 . The operative part of Assessing Officer s order is reproduced below:- The submission of the assessee have been duly considered and found unacceptable. From clause 16 of Form 3CD of the Audit Report itself it is very clear that the bonus and commission to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed and added to the income of the assessee. 4. Aggrieved the assessee filed appeal before Ld CIT(A) and submitted the following submissions:- 1. That it had paid Rs.6,000/- towards bonus and Rs. 5,11,644/- as commission to its Managing Director Shri Kapil Goswami and these expenses were debited to P L A/c under the head managerial remuneration. 2. That the company had paid the above amount in terms of resolution passed in the Board Meeting. 3. That share holding of the Managing Director was only 17.5%. 4. That bonus and commission paid to Managing Director of the company are part of the salary as shown in form No.16 issued by the company to the Managing Director. 5. That section 36(1)(ii) does not mention about the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Managing Director is having share holding 17.50% in the company and so was eligible for substantial profit/dividend from the company. The appellant has also not been able to bring any facts on record regarding the reasonableness of the payments made on account of bonus and commission to the Managing Director. No commercial expediency for the above payments has also been brought on record. Moreover, this ground of appeal on similar facts has been decided by me against the appellant vide order dated 15.12.2010 in the appellant s case for assessment year 2005-06.In view of the findings above, I am in agreement with the views of the Assessing Officer regarding the disallowance made on account of payments of commission and bonus to the Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bonus and commission paid and dividend payable as per law will be allowable as deduction. 8. While delivering the above judgment, the ITAT had followed AMD Metplast Ltd. v. DCIT in I.T.A. No.3934/Del/2009 in order dated 31st August, 2010. 9. The Ld AR further brought to our notice that the said decision of AMD Metplast Ltd. (supra) was challenged in the High Court and Hon'ble Delhi High Court had decided the matter in favour of the assessee. In this respect he took us to page 141-147 where the said order of Hon'ble Delhi High Court was placed. The Ld AR argued that in view of judgment of Hon'ble jurisdictional High Court, the appeal of the assessee should also be allowed. 10. The Ld DR, on the other hand, argued that assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the Companies Act, 1956. The dividend had to be paid to all shareholders equally. This position could not be disputed by the Revenue. Dividend was a return on investment and not salary or part thereof. 12. The facts of the present case are similar to the facts of AMD Metplast Pvt. Ltd. and therefore following the judgment of Hon'ble Delhi High Court, we hold that the amount of commission and bonus paid to the Managing Director was an allowable business expenditure. The facts for the assessment year 2007-08 2008-09 are same except the difference in the amount. Therefore, all the three appeals filed by the assessee are allowed and decided in favour of the assessee. 13. In the result, the appeals filed by the assessee are allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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