TMI Blog2018 (10) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned advocate cum solicitor vide bill dated 21.07.2011. Hence, these expenses are to be allowed because as the AO has never doubted the genuineness of the expenses. As the liability has been crystalized during the AY 2011-12 and assessee has rightly claimed the same. - Decided in favour of assessee Disallowance of remuneration paid to director - payment of higher remuneration - Held that:- There is no tax evasion and there is reasonableness of managerial remuneration. Now no approval is required from the Central Government for making payment of higher remuneration even in case of loss in the case of unlisted public company. In view of these facts, we are of the view that this is allowable expenditure and we allow the same accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the relevant AY 2012-13. Accordingly, the AO disallowed the expenses and added back to the returned income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), who further held that the invoice relates to January 2010 to March 2010 i.e. relating to FY 2009-10 relevant to AY 2010-11 and furthermore, it was observed that the expenditure can be treated as capital in nature and hence directed the AO to allow depreciation as per law. Aggrieved, now assessee is in second appeal before Tribunal. 4. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us, the learned Counsel for the assessee explained that these payments relates to legal and professional charges paid to advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be noted that the liability for this demand has been crystalized only on raising of bills by the concerned advocate cum solicitor vide bill dated 21.07.2011. Hence, we are of the view that these expenses are to be allowed because as the AO has never doubted the genuineness of the expenses. As the liability has been crystalized during the AY 2011-12 and assessee has rightly claimed the same. We allow the claim of the assessee and set aside the orders of the lower authorities. This issue of the assessee s appeal is allowed. 6. The next issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of remuneration paid to director to the extent of ₹ 8,41,528/-. For this assessee has raised the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Assessing Officer. Aggrieved now assessee is in second appeal before Tribunal. 8. Before us, the learned Counsel for the assessee submitted that the managing director Shri G.N. Guruprasad does not held any equity shares in the assessee company and hence assessee is being taxed under the highest slab rate. It was also claimed that the assessee company was not liable for tax due to substantial losses year to year. According to the learned Counsel there is no scope evasion of tax and in term of CBDT Circular No. 6P dated 6th July 1968 explaining the pre-requisites invoking the provisions of section 40A(2) of the Act are missing. The relevant circular states that it should be borne in mind that the provision is meant to check e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee also explained that in view of notification G.S. R No. 70 dated 8th February 2011 issued by the Ministry of Corporate Affairs, Government of India, Unlisted Public Limited companies are not required to obtain any permission where the remuneration of Director s exceeds limits in cases where they have no or inadequate profits relevant extract of the aforesaid notification dated 8th February 2011 is reproduced below: - 2. The primary purpose of regulations over managerial remuneration is to protect stakeholders. particularly shareholders and creditors. Unlisted companies are in several respects similar to private limited companies. A substantial number of the applications coming to the Ministry fall under this category and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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