GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
What's New Case Laws Highlights Articles News Forum Short Notes Statutory TMI SMS More ...
Extracts
Home List
← Previous Next →

2015 (4) TMI 945 - BOMBAY HIGH COURT

2015 (4) TMI 945 - BOMBAY HIGH COURT - TMI - Disallowance under section 40(c) - Whether the commission on sales paid by the assessee constituted “the provisions of any remuneration or benefit or amenity” within the meaning of Section 40(c)(iii)? - Held that:- In order to attract ceiling under Section 40[c] of the Act, the payment in dispute must be shown to be a periodical payment. A lumpsum payment or one time payment does not fall in it. Here the fact that commission was payable only if annual .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eld that first limb of the counsel is arguments before it had succeeded. We therefore, find its disallowance under Section 40[c] not permissible. - Decided in favour of the assessee - INCOME TAX REFERENCE No. 21 OF 1993. - Dated:- 9-4-2015 - B. P. Dharmadhikari And S.B. Shukre, JJ. For the Appellant : K.P. Dewani For the Respondent : Mr. Anand Parchure, Advocate for Respondent. Oral Judgment. (Per B.P. Dharmadhikari, J) The applicant/ assessee moved an application under Section 256[1] of the Inc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ithin the meaning of Section 40(c)(iii) of the Income Tax Act, 1961 ? 2. That in view of the findings recorded by the Tribunal that the claim of commission paid was reasonable, any disallowance under section 40(c) is permissible ? 2. Shri Dewani, learned counsel for the assessee after narrating the facts has urged that the commission paid to the Directors of assessee was a lumpsum payment, contingent upon the annual turn over and as such could not have been subjected to Section 40[c] of the Inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt of gratuity. Here the commission has been paid to the Directors of the assessee company, who were under its control, and though it is made in one lumpsum, its splitting every month is not prohibited. He has submitted that in this situation, when the Directors were being paid remuneration and commission has been paid over and above it, it is rightly subjected to section 40(c)(iii) of the Income Tax Act. 4. The facts are not in dispute. One B.N. Shaw (HUF), A.K. Jaiswal and M.K. Jaiswal have be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

isallowed the excess. This disallowance has been upheld by CIT (Appeals) and thereafter by ITAT. 5. Perusal of the order passed by the CIT (Appeals) shows that it has relied upon two Special Bench judgments which are mentioned in paragraph no.5 of its order. The judgments of Special Bench in case of I.T.O. .vrs. Sapt Textile Products India Ltd. (ITA No.1304/Bom/79 dated 20.04.1981), is examined by this Court and the appeal of the Assessee - Sapt Textile has been partly allowed. The expenditure o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e applied. The judgment of Hon'ble Apex Court reported at (1993) 201 ITR 1063 (SC) (Bharat Beedi Workers (Private) Ltd .vrs. CIT) has been followed. However, as reference before this Court is restricted to only Section 40[c], we are not required to look into any other provision. 6. Other Division Bench judgment of this Court reported at (1994) 210 ITR 770 (CIT .vrs. Colgate Palmolive (India) again considers the issue of retirement gratuity. This judgment is delivered by same Bench on same da .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ld be covered by those provisions. By this analogy, it is observed that if the computation provisions contained in Section 40[c] and Section 40A[5] do not for nonperiodic payments not relatable to the previous year, such payments are not contemplated, as being covered by these sections. It is further observed that maximum ceiling in Section 40[c] is clearly in respect of periodic payments only. Conclusion drawn is, payments in both these sections envisage only periodic payments. 7. Here it will .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the amount of commission on sales paid to International Paper Co. which was the sole proprietary concern of the said Managing Director was correct under Section 40[c]. The Division Bench in paragraph no.5 in this judgment has made reference to judgment of Karanataka High Court reported at (1980) 121 ITR 551 (Kar) T.T.Krishnamachari & Co. .vrs. ITO), and found that there the Karanataka High Court categorically held that expenditure incurred by way of commission paid to the independent sell .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Karnataka High Court quoted with approval by the Hon'ble Apex Court, has been reproduced. In para 8, the Division Bench has held that the Hon'ble Apex Court has clearly answered the controversy about the scope and ambit of Section 40[c]. It has found that payments made to Directors, as Directors (qua Director) fall within Section 40[c]. Payment made in consideration of the valuable right parted with by the directors of the assessee company in favour of the assessee company are outsid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ous year. The Division Bench has taken two hypothetical illustrations in that paragraph and thereafter found that the expenditure must be relating to the period comprised in the previous year or specific part thereof. The Hon'ble Apex Court also in case of (Bharat Beedi Workers (Private) Ltd .vrs. CIT) (supra), considered the issue and in paragraph no.8 found that the net is cast very wide to ensure that excessive or unreasonable payments are not made to the persons in control of the affairs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has approved the finding of Karnataka High Court that Section 40[c] refers to an expenditure incurred by making periodical payments to a person mentioned in that clause apparently for any personal service that may be rendered by him. 8. Gujarat High Court has in (2001) 251 ITR 364 (Guj) (CIT .vrs. Commercial Ahmedabad Mills Co. Ltd.), while accepting the view of Bombay High Court in Colgate Palmolive (India) (supra), noted that in facts before it a lumpsum payment of ₹ 10,500/was made to t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Latest Notifications:

    Dated      Category

20-7-2017 Cus (NT)

18-7-2017 IT

18-7-2017 CE (NT)

18-7-2017 CE

18-7-2017 GST CESS Rate

15-7-2017 Kerala SGST

14-7-2017 Andhra Pradesh SGST

14-7-2017 Cus (NT)

14-7-2017 Cus

13-7-2017 Co. Law

13-7-2017 Co. Law

13-7-2017 ADD

13-7-2017 ADD

12-7-2017 Jammu & Kashmir SGST

12-7-2017 Gujarat SGST

12-7-2017 Gujarat SGST

12-7-2017 CGST Rate

12-7-2017 UTGST Rate

12-7-2017 UTGST Rate

12-7-2017 IGST Rate

More Notifications


Latest Circulars:

19-7-2017 Income Tax

18-7-2017 Customs

17-7-2017 Customs

14-7-2017 Income Tax

13-7-2017 Central Excise

13-7-2017 Customs

13-7-2017 Central Excise

13-7-2017 Customs

7-7-2017 Income Tax

7-7-2017 Goods and Services Tax

More Circulars



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version