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TMI Blog2020 (8) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts and in law in deleting disallowance of Rs. 1,92,80,954/- being commission on sales paid to the shareholder Director(s). 2. The Ld. CIT (A) has failed to appreciate that the shareholder director was entitled to dividend in view of accumulated profit available and the commission so paid is clearly prohibited by the provisions of section 36(l)(ii) of Income-tax Act, 1961." 2. The facts in brief are that the assessee-company is engaged in the business of manufacturing of software sophisticated dynamic balancing equipment different in sizes and performance capabilities. Ld. Assessing Officer from the perusal of the tax audit report, noted that assessee has paid commission to its directors for sums aggregating to Rs. 1,92,80,954/-. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Develop the market base and customer base. ■ Develop the Indian as well as overseas market to increase the turnover of the company. ■ Development of Public Relations for increase the visibility of company in public at large. ■ Conduct the seminar on Balancing Machine on behalf of company. ■ Conduct Research on development of business and products. ■ Promote the success of the company for the benefit of its members. ■ Supervisor of office staff and technical assistance (including conducting staff evaluations) In lieu of said duties and functions assessee-company had agreed to pay, additional compensation apart from their regular compensation, based on turnover in the following manner:- "St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Hon'ble Jurisdictional High Court in the case of AMD Metplast (P.) Ltd. v. DCIT, 341 ITR 563 and CIT v. Career Launcher India Ltd. [2012] 250 CTR 240 (Del). Ld. CIT (A) looking to the entire facts, past history and the law laid down by the Hon'ble Jurisdictional High Court held that the facts of the case are identical to the pronouncement of Hon'ble Jurisdictional High court and commission is allowable. 6. Ld. DR relied upon the observation of the Assessing Officer stated that in terms of Section 36(1)(ii) any kind of commission paid to the Directors who was a shareholder cannot be allowed where they are entitled for dividend and profits of the company. 7. On the other hand, ld. counsel for the assessee has strongly relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that commission of Rs. 25,00,000 paid to Mr. Ashok Gupta, managing director of the assessee cannot be allowed as a deduction in view of section 36(1)(ii) of the Income-tax Act, 1961, and the said amount can be only allowed under section 36(1)(ii) if dividend of Rs. 25,00,000 could not have been paid to Mr. Ashok Gupta." Their Lordships after considering the various judgments and the position of law have observed and held as under: "9. We fail to understand how the aforesaid observations assist and help the Revenue in the factual matrix of the present case. Ashok Gupta is the managing director and in terms of the board resolution is entitled to receive commission for services rendered to the company. It is a term of employment on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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