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Dy. Commissioner of Income Tax Versus M/s Nagpur Power & Industries Ltd.

Addition on account of commission paid to the director - CIT(A) deleted the addition - Held that:- Assessing Officer has disallowed the commission paid to Shri Gautam Khandelwal, shareholder and director of the company on the ground that it is actually dividend. However, as recorded by the learned Commissioner (Appeals), Shri Gautam Khandelwal, is only 4.28% of the shareholder of the company and distribution of dividend, if at all, it is declared by the company would be very negligible, hence, i .....

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ase, 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 enduring benefit, hence, is a capital expenditure. Having held so, strangely enough, the Assessing Officer did .....

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urring in nature is without any basis as the learned Commissioner (Appeals) has recorded a finding of fact that the assessee had been incurring such expenditure from earlier assessment years and the Assessing Officer has allowed such expenditure fully. Considering the aforesaid facts and circumstances, we do not find any reason for disallowance of the plantation expenditure claimed by the assessee. Accordingly, we uphold the order of the learned CIT(A) - Decided against revenue. - ITA No. 6393/M .....

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ified 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 directo .....

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enduring nature." 2. As could be seen, grounds no.1 and 2, are on the common issue of addition of ₹ 11,19,877, made by the Assessing Officer and deleted by the first appellate authority. 3. Briefly the facts are, the assessee is a company engaged in the business of ferro manganese, silico manganese and value added ferro alloys, ferro manganese slag and similar other products. For the assessment year under consideration, the assessee filed its return of income on 18th September 2010, d .....

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xpense under section 36(1)(ii) of the Act, proposed to disallow the same. Objecting to the proposed disallowance 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 resolut .....

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f the assessee. Being aggrieved of such addition, the assessee challenged the same in an appeal preferred before the first appellate authority. 4. Before the learned Commissioner (Appeals), the assessee reiterated the stand taken before the Assessing Officer. The learned Commissioner (Appeals) considering the submissions of the assessee in the light of the facts and materials on record, found that the assessee is a public limited company wherein Shri Gautam Khandelwal holds only 4.28% of the sha .....

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the Tribunal decision in Dalal Brocha Stock Broking Pvt. Ltd. (supra), the learned Commissioner (Appeals), after going through the same noticed that not only the said company is a private limited company, but 100% shareholders of the company are the father and sons to whom commission has been paid. He, therefore, was of the view that in that case, 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 Cou .....

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g Officer, the learned Counsel for the assessee strongly supported the findings of the first appellate authority. 7. We have considered the submissions of the parties and perused the material available on record. As can be seen, the Assessing Officer has disallowed the commission paid to Shri Gautam Khandelwal, shareholder and director of the company on the ground that it is actually dividend. However, as recorded by the learned Commissioner (Appeals), Shri Gautam Khandelwal, is only 4.28% of th .....

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ector. 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), we uphold the same by dismissing the ground raised by the Revenue. 8. The next issue, as raised in ground no.3, relates to disallowance of ₹ 12,21,098, by the Assessing Officer but deleted b .....

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iness 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 purpose of environmental safety and pollution control. He found that the assessee had to incur such expenditure for planting citrus tree to reduce pollution caused by the f .....

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