Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (10) TMI AT This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2017 (10) TMI 1241 - AT - Income Tax


Issues:
1. Disallowance of managerial remuneration exceeding limits sanctioned by Central Government.
2. Taxation of profit element embedded in bogus purchases instead of the entire transaction.

Issue 1 - Disallowance of Managerial Remuneration:
The appeal concerns the disallowance of managerial remuneration by the Assessing Officer (AO) exceeding the limit sanctioned by the Central Government. The AO disallowed ?7,32,880 out of the total remuneration of ?25,32,880 paid to an individual. The AO's decision was based on the excess amount paid beyond the sanctioned limit. The Commissioner of Income Tax (Appeals) (CIT(A)) upheld the AO's action, citing relevant court decisions. The appellant argued that the remuneration was necessary for the business and was paid in accordance with a board resolution and Central Government approval. The Income Tax Appellate Tribunal (ITAT) noted discrepancies in the CIT(A)'s consideration and remanded the issue for verification of the Central Government's approval.

Issue 2 - Taxation of Profit Element in Bogus Purchases:
The second appeal pertains to the taxation of the profit element embedded in alleged bogus purchases. The AO added the entire amount of ?56,24,615 from three parties as bogus purchases. The CIT(A) restricted the disallowance to 25% of the profit element, citing circumstantial evidence and a Gujarat High Court decision. The Revenue challenged this decision before the ITAT. The ITAT affirmed the CIT(A)'s order regarding the bogus purchases but corrected the figure to ?56,24,615. The ITAT dismissed the Revenue's appeal, maintaining the profit estimation at 25% and granting relief on the remaining balance.

In conclusion, the ITAT set aside the appeal of the Assessee and dismissed the Revenue's appeal, with modifications to the figures related to bogus purchases. The judgment provides detailed analysis and legal interpretations concerning the disallowance of managerial remuneration and the taxation of profit elements in bogus purchases, ensuring a comprehensive review of the issues involved.

 

 

 

 

Quick Updates:Latest Updates