TMI Blog2012 (12) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... f fact are erroneous or were contrary to the material on record. - Decided in favor of assessee. - ITA 669/2012 & 670/2012 - - - Dated:- 3-12-2012 - MR. S. RAVINDRA BHAT AND MR. R.V. EASWAR JJ. Appellant: Sh. Sanjeev Rajpal, Sr. Standing Counsel. S. RAVINDRA BHAT, J: (OPEN COURT) The questions of law sought to be urged by the Revenue in these appeals are as follows: - ITA 669/2012 (assessment year 2002-03) Whether the Income Tax Appellate Tribunal (ITAT) was correct in law in deleting the addition of Rs.29,42,534/- made by the assessing officer by disallowing the commission paid by it to its two directors which was not allowable as per Section 36(1)(ii) of the Income Tax Act, 1961? (i) Whether the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. It was held by the Tribunal in the appeal for the assessment year 2002-03 that the disallowance of the commission was not justified. In respect of the assessment year 2003-04, on the issue relating to the validity of the reopening of the assessment; the Tribunal noticed that the original assessment was completed under section 143(3) and notice for reopening was issued under section 148 on 31.03.2009, more than four years from the end of the relevant assessment year and, therefore, the first proviso to section 147 was applicable. The Tribunal held that the assessee had fully and truly disclosed all material facts relating to the commission payment and the assessing officer, in the reasons recorded for reopening the assessment, had not es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The Tribunal has found that the assessee has furnished full and true particulars at the time of the original assessment under section 143(3) and there was no failure on its part. The fact of payment of commission to the directors and the fact that they were major shareholders were already on record and the assessing officer gathered these facts only from the perusal of the assessment record. The Tribunal has accordingly held that the reopening of the assessment made after four years from the end of the relevant assessment year, where the original assessment was framed under section 143(3), was invalid. It has not been pointed out before us on behalf of the revenue that these findings of fact are erroneous or were contrary to the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs on pure questions of fact. Moreover, a Division Bench of this Court in Metplast Pvt. Ltd. v. DCIT, (2012) 341 ITR 563, after referring to the judgment of the Bombay High Court in Loyal Motors Services Company Ltd. v. CIT, (1946) 14 ITR 647 opined that the commission, if found to be paid for services rendered by the director as per the terms of the appointment, cannot be said to be distribution of dividend or profits in the guise of commission. It was noticed that while commission was paid as a form of remuneration for actual services rendered, dividend is a return of investment and is paid to all its shareholders equally. It was thus held that if the commission is paid for actual services rendered, section 36(1)(ii) will not apply. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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