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2015 (8) TMI 1201 - ITAT DELHI

2015 (8) TMI 1201 - ITAT DELHI - TMI - Disallowance u/s 14A - CIT(A) deleted the addition - Held that:- Nothing has been brought on record by the AO to hold why the suo moto disallowance made by the assessee u/s 14A on facts could not be accepted. On consideration thereof it is seen that in the peculiar facts and circumstances of the case where the AO has not recorded his finding as to why he was not satisfied by the correctness of assessee’s claim of expenditure. No distinguishing facts and cir .....

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007-08 & 2008-09 as per section 17(1) of the Act, the term “salary” includes any, fees, commission, perquisites or profit in lieu salary, All the sums are taxable under the head “salary” only. These two directors, while filing the return of income, declared not only the salary but commission also as part of income under the head “salary” The same are assessed as such. Therefore, it is incorrect to hold that bonus or commission shall not form part of salary or remuneration. In accordance with the .....

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hat if the commission was not paid, such sum would have been paid to the employees as profit or dividend. Thus, the exception provided in section 36(1)(ii) do not apply. In such circumstances the amount payable as commission are allowable u/s 36(1)(ii) of the Act. - Decided in favour of assessee. - I.T.A . No.-4776/Del/2012 - Dated:- 19-8-2015 - SMT DIVA SINGH AND SH. T. S. KAPOOR, JJ. For The Appellant : Smt. Parwinder Kaur, Sr. DR For The Respondent : Sh. R. K. Kapoor, CA ORDER PER DIVA SINGH, .....

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Act. 3. The appellant craves leave for reserving the right to amend, modify, after, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The relevant facts of the case are that the assessee in the year under consideration declared an income of ₹ 3,80,63,020/- which was processed u/s 143(1) and subsequently after issuance of notice etc u/s 143(2) and 142(1) etc. it was subjected to scrutiny assessment. The record shows that the assessee company .....

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. 3. Aggrieved by which the Revenue is in appeal before the Tribunal. 4. Ld. Sr. DR relies upon the assessment order. The Ld. AR assessee on the other hand inviting attention to paras 4 to 4.4 of the assessment order submitted that the disallowance has been made in a mechanical manner and contrary to the mandate of the law which necessitates that the AO is duty-bound to record a satisfaction as to how the disallowance made by the assessee is considered to be not proper. Referring to page 4 of th .....

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owance without recording any reason. The CIT(A) it was submitted also recorded the finding that nothing has been brought on record by the AO to hold why the suo moto disallowance made by the assessee of ₹ 97,604/- u/s 14A on facts could not be accepted. Accordingly it was his submission that relying upon the proposition of law as laid down by the Jurisdictional High Court in the case of Maxopp Investment Ltd. vs CIT [2012] 347 ITR 272 (Del.) and followed by another judgements dated 25.11.2 .....

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had been dismissed by the Coordinate Bench in order dated 22.01.2015 in ITA No.2623/Del/2013. The same it was requested may be followed. 4.1. The Ld. Sr. DR relied upon the assessment order. Considering the afore-said order of the Co-ordinate Bench stated to be an identical facts and circumstances, no distinguishing facts or circumstances was cited before the Bench in order to canvass a contrary view. 5. We have heard the rival submissions and perused the material available on record. On consid .....

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ssue agitated by the Revenue pertains to the commission of ₹ 11,00,000/- paid to Mrs. Malati Kanoria, Managing Director u/s 36(1)(ii). Considering the fact that the assessee company had declared a profit of ₹ 3,28,19,588/- the AO concluded that the amount paid as a commission could have been paid as a profit or dividend. Accordingly the assessee was asked to show why disallowance of the said amount not be made. The assessee placed reliance upon the order of the ITAT in 2003-04 assess .....

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e intervening years. It was submitted that infact the order of the ITAT in 2003-04 assessment years, was upheld by the Hon ble High Court also. In order to establish that in 2008-09 assessment year and 2007-08 assessment year, there was no variation in the view taken, attention was invited to order dated 22.01.2015 in ITA No.- 2623/Del/2013 (Assessment year 2008-09) where the issue was decided by the Co-ordinate Bench in following manner:- 4. Ground No. 2 relates to addition of ₹ 13 lakhs .....

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or distinguishing features so as to make us take a different opinion. On the contrary the appeal filed by the revenue against the order of the Tribunal, stands dismissed by an order of the Hon ble High Court dated 18th February 2011 in ITA No.776/2010. In such a scenario, we find no infirmity in the order impugned. So we dismiss this ground of appeal of revenue. 8.1. Similarly it was submitted that the Co-ordinate Bench vide order dated 20.07.2010 in ITA No.-2349/Del/2010 for 2007-08 assessment .....

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assessment order. However, no distinction on fact or law was brought to the notice of the Bench. 10. We have heard the rival issues and perused the material available on record. The record shows that disallowance as per past practice was made by the AO. The reply of the assessee before the AO it is seen citing order of the ITAT on identical issue in 2003-04 Assessment Year relying upon the statutory provisions was not accepted. In appeal the CIT(A) summed up the facts in the following manner:- 5 .....

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assessee company from the assessment year 2002-03 wherein for the first time disallowance on the similar allegations and for the same reasons was made by the AD. The issue travelled up to the Hon ble ITAT, New Delhi, and the same was decided in favour of the assessee in ITA No. 3863/DEU2007 by holding that the commission has been paid in terms of conditions of employment. Therefore, relief to the assessee may be allowed because the reasoning given in the assessment order as well as the basis of .....

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the AO on account of. Disallowance of commission paid to Mrs. Malati Kanoria, director of ₹ 7,72,712/- u/s section 36(1)(ii) of the Income Tax Act. The relevant extract of the aforesaid order of the Hon ble ITAT is reproduce below for reference:- 8. We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. The commission is disallowed on the following reasons: - i. the assessee failed to explain the nature of services rendere .....

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ofit, the director decided to pay commission to these two directors. The remuneration payable was held as allowable business expenses and in respect of which there is no dispute. Therefore, there is no dispute regarding rendering of the services, by these two directors. What is the remuneration payable for such services was decided by the board of directors and, hence, in terms of resolution, these two directors were entitled to receive remuneration. Accordingly, it cannot be said that there is .....

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under the head salary The same are assessed as such. Therefore, it is incorrect to hold that bonus or commission shall not form part of salary or remuneration. In accordance with the provisions of section 36(1)(ii) any sum paid to an employee as bonus or commission for services rendered where such sum would, not have been payable to him as profit or dividend if it had not been paid as bonus or commission is allowable. The sum paid to the directors is as an employee of the company. The bonus or c .....

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