TMI Blog2021 (1) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... er European countries and therefore, is entitled to remuneration - HELD THAT:- CIT (Appeals) as well as the Tribunal have completely failed to establish that no material was produced by the assessee to demonstrate that the Managing Director had secured the business of the company from Italy and other European countries. The provisions of Section 40A(2) which are applicable to the fact situation of the case have also not been taken into account by the CIT (Appeals) as well as the tribunal. We deem it appropriate to quash the order passed by the Commissioner of Income Tax (Appeals) and the tribunal and remit the matter to the CIT (Appeals) to decide the appeal afresh by taking into account the provisions of Section 40A(2) of the Act and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made garments. The assessee filed the return of income for the Assessment Year 2006-07 declaring total income of ₹ 9,03,70,920/-. The return filed by the assessee was taken up for scrutiny and a notice under Section 143(2) of the Act vas issued on 02.11.2007. The Assessing Officer by an order dated 08.12.2009 disallowed a sum of ₹ 8,14,25,233/- which was paid as remuneration to the Director on the ground that there is no material to establish that the Director had rendered services to the company warranting payment of ₹ 8,14,25,233/- except being Managing Director. The Assessing Officer disallowed the entire sum of ₹ 8,14,25,233/- which was paid to the Managing Director. The assessee thereupon approached the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company was paid to the Managing Director as remuneration. It is further submitted that no material was produced by the assessee that the Managing Director had procured the orders globally for the company. It is also contended that the tribunal committed an error in shifting the burden on the Assessing Officer to establish the absence of Managing Director from the work place and the burden is on the assessee to establish that the expenditure in the form of remuneration to the Managing Director was incurred for the purpose of business and the same was proportionate to the services rendered to the assessee. It is also pointed out that under Section 40A(2) of the Act empowers the Assessing Officer to disallow the expenditure / payment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount in question has been taxed in the hands of the Managing Director and therefore, there is no loss of revenue to the exchequer. It is also submitted that concurrent findings of fact have been recorded in favour of the assessee by the Commissioner of income Tax (Appeals) and the tribunal and therefore, no interference is called for in this appeal. In support of aforesaid submissions, reliance has been placed on decisions in CIT VS. BILAHARI INVESTMENTS PVT LTD , 299 ITR 1, CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295, CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC), SUDARSHAN SILKS SAREES VS. CIT , 300 ITR 205 SC, VIJAY KUMAR TALWAR VS. CIT, NEW DELHI , 330 ITR 1 SC/2010, K. RAVINDRANATH NAIR VS. CIT 247 ITR 178 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner of the firm, or member of the association or family, or any relative of such director, partner or member; 6. Thus, from perusal of the aforesaid provisions, is evident that the burden is on the assessee to establish that the amount was expended wholly and exclusively for the purpose of business or profession and Section 40A(2)(a) of the Act permits the Assessing Officer to disallow the expenditure which is excessive or unreasonable. 7. From perusal of the order passed by the Assessing Officer, it is evident that the Assessing Offices has disallowed the payment made to the Managing Director merely on the ground that total stay of the Managing Director in India is for a period 14 to 15 days. The aforesaid finding has been set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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