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TMI Blog2017 (10) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 22-02-2013 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only issue in this appeal of assessee in ITA No. 197/Mum/2015 is against order of CIT(A) confirming above disallowances of managerial remuneration of Rs. 7,32,880/- out of total managerial remuneration of Rs. 25,32,880 paid by the assessee company to Kailash V. Nasta. For this assessee has raised following ground No.1: - "1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 7,32,880/- made by the learned assessing officer, being disallowance of part amount of Managerial Remuneration of Rs. 7,32,880/- out of Managerial Remuneration of Rs. 25,32,880/- paid by the appellant company to Mr. Kailash V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the above and stated the facts that the efforts put forth by Mr. Kailash Nasta in securing some important orders during the year, the assessee had decided to pay him an incentive at the rate of 2% of Net Profit. The decision to pay the incentive was taken by the Board in its resolution dared 15.01.2009. A copy of sanction Letter dated 11.11.2010 issued by the Central Government and the copy of Board Resolution dated 25.01.2009 are enclosed in assessee paper book. It was claimed by the assessee that the incentive of Rs. 7,32,880/- has been paid in the normal course of business activity and therefore the same as allowable under section 37(1) of the Act. 5. We find from the records of the case that the 14 AO while passing the Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remuneration to Mr.Kailash Nasta for securing some important agreements for the company. The said contract has resulted in profit of the assessee. The payment was also approved by the board resolution passed on 15th January 2009 and the remuneration paid does not violate any provisions of companies Act, 1956. It was further claimed before CIT(A) that Central Government has granted approval for payment of remuneration to Mr. Kailush Nasta under the provisions of section 334(1B) of the Companies Act, 1956. The approval granted by the Central Government is after considering the special resolution dated 15.03.2009. We gone through the case records and noted that CIT(A) has not considered this aspect while adjudicating the issue. Hence, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus purchases from these three parties at Rs. 56,24,615/-. Aggrieved, assessee preferred the appeal before CIT(A), who after considering the submissions of the assessee and other details and also considering the decisions of Hon'ble Gujarat High Court in the case of CIT vs. Smith P Seth 356 ITR 803 restricted the disallowance by estimating the profit rate at the rate of 25% by observing in para 3.11 as under: - 3.11 The facts in the present case showing. that the appellant was not in a position to prove the existence of the suppliers. The suppliers were found to be engaged in providing bogus bills without actual delivery of goods. Moreover, these suppliers are not regular parties and they were found to have been supplied only during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the balance of Rs. 3,29,853/-. The Grounds raised are partly allowed." Aggrieved, Revenue is in second appeal before Tribunal. 9. We have considered the plea of learned DR and find that actual bogus purchases are at Rs. 56,24,615/- and this should be taken as correct figure in the order of CIT(A). However, we are not convinced with the arguments of learned DR to increase the profit rate or sustained full addition. We confirmed the order of CIT(A) except, the figures mentioned in the order of bogus purchases at Rs. 4,39,803/-, whereas, the actual bogus purchases are at Rs. 56,24,615/- which we have rectified. The appeal of Revenue is dismissed but subject to above directions. 10. In the result, the appeal of Assessee is set aside and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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