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Issues involved: Disallowance of excessive payment of remuneration to dealers.
Summary: The appeal by the revenue was against the order of the CIT(Appeals) for A.Y. 2006-07, where the only effective ground raised was the deletion of disallowance of excessive remuneration paid to dealers. The AO disallowed the balance payment of remuneration, amounting to Rs. 89,98,913, as unreasonable and excessive. Before the CIT(A), the assessee relied on the previous year's order, where it was observed that the expenditure was for business purposes and not capital, personal, or bogus. The AO's restriction of remuneration paid was deemed unjustified, as the appellant had paid a lesser percentage of remuneration compared to commission received in previous years. The CIT(A) directed the AO to delete the addition made, following the previous year's order. The department appealed, arguing that the remuneration paid in earlier years should not be compared to the current year due to changes in business setup. The matter was remitted to the AO for fresh examination without reliance on past remuneration comparisons. Ultimately, the appeal of the department was treated as allowed for statistical purposes, with the order pronounced on 30-11-2009.
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