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TMI Blog2012 (11) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... cy decision. The expenditure is for the purpose of earning income the amount paid as remuneration is deductible. Therefore, order of the CIT(A) is set aside and deleted the addition of Rs. 49,66,499/- made by the Assessing Officer on account of remuneration paid to director and administrative expenses - In the result, appeal of the assessee is allowed. - ITA No. 1310/HYD/2010 - - - Dated:- 27-7-2012 - SMT. ASHA VIJAYARAGHAVAN AND SHRI D. KARUNAKARA RAO, JJ. Appellant by : Shri P. Murali Mohana Rao Respondent by : Shri K.E. Sunil Babu ORDER PER ASHA VIJAYARAGHAVAN, J.M.: This appeal filed by the assessee is directed against the order of CIT(A)-IV, Hyderabad dated 13/08/2010 for the assessment 2007-08. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income filed by him for the AY 2007-08. He further averred that TDS was deducted thereon and remitted to the account of Central Government. He further argued that since the remuneration received by the director was already offered to tax, levying of tax on the same amount by making addition to the returned income of the assessee, would amount to double taxation of the same income, which is against the principles of natural justice. He further submitted that the remuneration paid was as per the resolution passed by the assessee company in its Board meeting, which was in support of assessee s claim. 6. It was contended that the expenditure had been incurred exclusively for the management of the business. He referred to the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other hand, the loans and advances increased from Rs. 13.12. cr to Rs. 19.84 cr during the year. Finally, it is seen from the balance sheet that the current liabilities and provisions increased from Rs. 21.96 cr. in the earlier to Rs. 26.32 cr. during the year. The assessee has not substantiated at any stage whether even such movement in the capital accounts was for the purpose of business. No figures for subsequent years were produced to substantiate that efforts were being made by the company to keep itself alive. Even in this scenario, the appellant chose to raise the remuneration of the director from Rs. 6 lakhs in the earlier year to Rs. 49.53 lakhs during the year. Even though the appellant has every right to manage its affairs in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der in respect of the assessee Yalamanchili Finance Trading P. Ltd. for the assessment year 2007-08 wherein the additions amounting to Rs. 49,66,499/- which includes remuneration paid to director amounting to Rs. 49,53,000/-, made by the AO has been upheld by the CIT(A) without considering the explanation offered by the assessee which is not correct, not justified and bad in law. 9. Before us, the learned counsel for the assessee Shri P. Murali Mohana Rao submitted that the amount paid to Director in the form of remuneration was already offered to tax by the Director i.e. Shri Y.S. Chowdary in the return of income filed by him for the AY 2007-08 under the head income from salaries. He further submitted that TDS was deducted and remitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he very reason for introduction of a dynamic director Shri Y.S. Chowdary. Further, as observed by the CIT(A) loans and advances increased from Rs. 13.12 cr. to Rs. 19.84 cr. during the year and the liabilities and provisions increased from Rs. 21.96 crore in the earlier to 26.32 crore during the year. The commercial expediency and the necessity to pull the company out of the lull in the business was the reason for appointment of the person of such quality and status as that of Shri Y.S. Chowdary, who would not compromise for lesser fees. In the case of Eastern Investment Ltd. Vs. CIT 20 ITR 1 (SC), the Hon ble Apex Court held as follows: we fail to appreciate how expenditure which is otherwise a proper expenditure can cease to be such me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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