TMI Blog2013 (3) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... es interacting to carry out its business. - The payment of commission by assessee company is to its whole time directors is to facilitate and to carry out on its business. - Thus the payment commission by assessee company is wholly and exclusively for business purposes and same is allowable. - Decided in favor of assessee. Payment to adverting agency - The AO stated that payment has no relevance to the business affairs of assessee. There were personal relations existed - held that:- There is no document on record as well, to justify the payments that it was made for business purposes. Considering the facts of the case and in the absence of any material on record, we do not find any infirmity in the order of authorities below. - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving rise to these grounds are that assessee company is engaged in the business of trading in shares, sub-letting of properties and consultancy services. Assessee claimed to have paid Director s commission aggregating Rs. 22,71,543/- as under: Name Commission paid TDS deducted Ms S.R. Vatch 1,55,000/- Nil Mr. Y. Kathpalia 6,543/- Nil Mr. F. Dadabhoy 35,000/- Nil H.C. Bhabha 20,75,000/- 6. During the course of assessment proceedings, it was explained that Directors have rendered various services in terms of Portfolio Management Services Agreement entered with M/s. ENAM. It was contended that assessee have been paying commission to its directors for more than 15 t0 20 years. All the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his submission Ld. AR referred profit and loss account for assessment year under consideration which is placed at P-100 of Paper Book and submitted that only assessee was having 7 employees in clerical staff to whom aggregate salary/wages and bonus paid in the whole financial year is Rs. 3,44,272/-. Ld. AR submitted that in assessment year 1990-91, assessment order was passed u/s. 143(3) of the Act and no disallowance of commission paid to non-whole time directors was disallowed and to substantiate his submission referred page 131 to 136 of Paper book which is a copy of assessment order for assessment year 1999- 91. Ld. AR further submitted that assessment orders were also passed u/s 143(3) of the Act for assessment years 1994-95 and 2005-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directors. A copy of said Resolution is placed at Page-105 of Paper Book. Ld. DR has not disputed the fact that assessee has been paying commission to its non whole time directors since 1988 and commission does not exceed 10% of net profit of assessee. We also observe that in the preceding assessment years, no such disallowance has been made by department even for assessment were completed u/s. 143(3) of the Act for assessment years 1990-91, 1994-95, 2005-06 and the copies of assessment orders are placed at pages 131 to 136 for assessment year 1990-91 and pages 148 to 153 for assessment year 2005-06. We also observe that assessee company has no managerial/other official as whole time employee save and except the staff in clerical section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been passed to Brandon Co. Pvt. Ltd since around 1999-2000, because of the friendship over many decades between him and Mr. C.H. Bhabha, and because Mr. Bhabha has consistently sought to establish business in ventures brought to him in Brandon and not to take them up personally. Unfortunately, none of the proposals brought by Canco have meaningfully fructified. However, it is only reasonable that Canco has charged Brandon fees in the current year for their role in introductions to business proposals and new trends in various markets, personal meetings and discussions, etc. examples of such proposals are: 1) The entry to India of Talenthill, a US consulting company that sought an Indian partner to manage in India their webbased consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, the payment of consultancy fee should be allowed. 13. I find that none of these proposals have been of any use to the appellant. The AO has also noted that there were personal relations between Bhabha and Mr. Ramesh Narayan. Since none of the services offered by Canco Advertising Pvt. Ltd. was utilized by the assessee company the AO is justified in disallowing the Consultancy fee paid by the appellant to Canco Advertising Pvt. Ltd. Hence, the disallowance is confirmed and appeal on this ground is dismissed. Hence, assessee is in further appeal before Tribunal. 16. During the course of hearing, Ld. AR submitted that said payments were made for business purposes. However, Ld. AR conceded that no business proposal was fructif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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