TMI Blog2015 (11) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend to Shri Gautam Khandelwal in the garb of commission. Moreover, the assessee has produced material on record to show that commission payment is in terms with the terms of appointment and towards services rendered by the director. Nothing has been brought on record by the Assessing Officer to controvert the aforesaid claim of the assessee. That being the case, the disallowance of commission paid, in our view, is without any valid reason. Accordingly, finding no infirmity in the order of the learned Commissioner (Appeals) - Decided against revenue. Disallowance of plantation expenses - CIT(A) deleted the addition - Held that:- As could be seen the only reason on which the Assessing Officer disallowed the expenditure is it is of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised following effective grounds:- 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of ₹ 11,19,877/- made by A.O. on account of commission paid to the director by holding that the disallowance of commission is not in the guise of dividend without appreciating the fact that despite of the huge profits the assessee has not declared any dividend. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of ₹ 11, 19,877/- made by A.O. on account of commission paid to the director without appreciating the fact that the commission paid ix] s. 36(1)(ii) is disallowable when the commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance of the commission payment, the assessee submitted an explanation stating therein that the commission paid to Shri Gautam Khandelwal, is actually part of salary paid to him which amounts to 5% of the net profit of the company and the said payment is also in terms with the provisions of Companies Act, 1956 It was also submitted that the commission payment was authorised by board resolution dated 30th June 2009. The Assessing Officer, however, was not satisfied with the explanation of the assessee. He was of the view that the assessee in the garb of commission has distributed its profit to the shareholders without treating it as dividend and paying dividend distribution tax thereon. Following a decision of the Tribunal, Mumbai Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is linkage between dividend and commission. 5. On the other hand, the learned CIT(A), relied upon the decision of the Hon'ble Delhi High Court in Hive Communication Pvt. Ltd. v/s CIT, ITA no.306 of 11, order dated 8th July 2011, and in the case of CIT v/s Convertech Equipments Pvt. Ltd., ITA no.669/2012, dated 3rd December 2012, wherein it was held that if commission is paid towards services rendered by the director as per terms of appointment, then no disallowance could be made by treating it as dividend. Accordingly, he deleted the addition. 6. While the learned Departmental Representative relied upon the reasoning of the Assessing Officer, the learned Counsel for the assessee strongly supported the findings of the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings, the Assessing Officer noticed that the assessee has debited an amount of ₹ 22,88,993, towards miscellaneous expenses which included plantation expenses of ₹ 12,21,098. The Assessing Officer disallowed the plantation expenses of ₹ 12,21,098, opining that the expenditure is going to get enduring benefit to the assessee. He further observed, as the assessee is not into plantation business the expenditure cannot be considered as revenue in nature. The assessee challenged the disallowance before the first appellate authority. 10. The learned Commissioner (Appeals) having considered the submissions of the assessee in the light of the facts on record, found that the expenditure incurred was primarily for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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