2021 (3) TMI 744 - HC - Income Tax

Disallowance u/s 36(1)(ii) - HELD THAT - Issue involved in the present appeal is covered by the decision of this Court in M/s.True Value Homes (India) Pvt. Ltd 2021 (3) TMI 529 - MADRAS HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Challenge to order passed by Income Tax Appellate Tribunal regarding assessment year 2009-10. Substantial question of law on deletion of disallowance under Section 36(1)(ii) of the Income Tax Act.

Analysis:
The High Court addressed the appeal challenging the Income Tax Appellate Tribunal's order for the assessment year 2009-10. The substantial question of law raised was whether the Tribunal was correct in upholding the Commissioner of Income Tax (Appeals) order deleting the disallowance made by the Assessing Officer under Section 36(1)(ii) of the Income Tax Act. The appellant contended that the issue was covered by a previous decision of the Court in another case. The Court referred to a judgment of the Delhi High Court where it was held that commission received by an individual was part of the salary and subject to tax, distinguishing it from dividend income. The Court also cited a Division Bench decision of the same High Court regarding the completion certificate for a construction project, emphasizing that administrative approval by the relevant authority was crucial for claiming deductions.

The Commissioner of Income Tax (Appeals) noted that the individual in question had declared the commission income for taxation at the maximum marginal rate without seeking any deductions, indicating no motive for tax avoidance. The High Court, after reviewing the facts and the precedents cited, concluded that both questions of law were settled by previous judgments of the Delhi High Court and the High Court itself. Consequently, the Court decided both questions against the Revenue and in favor of the assessee. The Tax Case Appeal was dismissed based on the precedents and the absence of tax avoidance motive. The judgment reiterated that the question of law was decided against the Revenue and in favor of the assessee, leading to the dismissal of the Tax Case Appeal without costs.