9911796707
TMI Blog1993 (5) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... the immediately preceding assessment year. The income from commission was also absent, the same having been earned at a figure of Rs. 1,25,000 in the preceding assessment year. The main income of the assessee-company was from dividends which were reflected at a figure of Rs. 5,87,664 in the P L account. 4. On the basis of the aforesaid facts, the ITO prima facie took the view that since the only source of income was from dividends, the various items of expenditure claimed were not allowable. He, in fact, issued a show cause notice to the assessee for the aforesaid purpose. The subsequent discussion in the assessment order pertains to the taxability of the dividend income under the head "Income from other sources" as against the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abad Tools P. Ltd., a company in which the assessee-company had substantial stake. 6. On the basis of the aforesaid facts, the ITO took the view that a major part of the expenditure pertained to the business of the subsidiary company and was, accordingly, not allowable as a deduction. Out of the total expenditure of Rs. 36,234, he allowed 50% as a deduction under s. 37(1) disallowing in the process the balance. 7. On further appeal, the CIT(A) on the same facts took the view that the entire expenditure was allowable having been incurred in connection with the assessee-company's business and there being no valid basis on the part of the ITO to effect a partial disallowance on the ground that some discussion also took place in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the subsidiary company as also M/s Ghaziabad Tools P. Ltd. cannot be divorced from the company's own business, since it is also in the interest of the assessee-company that its subsidiary/sister concerns do well in their respective businesses as the ultimate benefit would go to the assessee-company. In the final analysis, we uphold the action of the CIT(A) and reject the first ground in the Revenue's appeal. 10. The second ground pertains to the disallowance of the director's salary amounting to Rs. 69,840 on the part of the ITO and which came to be allowed in full by the CIT(A). The ITO in making the impugned disallowance once again took note of the items of income, reflected in the P L account and also referred to the other dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material on record took the view that there was no basis for effecting the impugned disallowance. The first appellate authority took note of the income from commission earned in the past and in the subsequent assessment years and also noted the absence of any material on record which would justify the action on the part of the ITO assuming in the process that the payment had been made for extra commercial consideration. 13. We have heard both the parties at some length in respect of the specific ground raised in the appeal. The learned Departmental Representative supported the order passed by the ITO whereas the learned counsel for the assessee-company supported the order of the CIT(A). According to him, the quantum of salary remained t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 50% of the salary paid to them was to be allowed as a valid deduction. The disallowance was accordingly reduced by a figure of Rs. 7,710. 16. We have heard both the parties and have also perused the material on the record. The learned counsel stated during the course of hearing that in all the preceding assessment years, the claim had been allowed in full and it was the assessee who should have been aggrieved with the order of the CIT(A) since a partial disallowance had been maintained. The aforesaid statement was not rebutted by the learned Departmental Representative. In this view of the matter, and on the facts and in the circumstances of the case, we uphold the action of the CIT(A) in allowing the partial relief to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal were identical to those as considered by the tax authorities in the preceding assessment years when the claim had been allowed in full. It was stated that a part of the residence was, in fact, being used as an office and this was also the position in all the preceding assessment years, when the stand taken had been accepted by the Department. 19. After examining the rival submissions, we find no good ground to interfere with the decision taken by the CIT(A) to accept the assessee's view point vis-a-vis the claim in question. 20. The last ground in the appeal pertains to the disallowance in respect of "interest paid to director". The ITO, in the course of assessment proceedings, took into account an amount of Rs. 8,075 as interest t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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