2013 (5) TMI 822

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..... der section 40A(2) of the I.T. Act holding that the same excessive. 2. Rival contentions have been heard and record perused. Facts of the case in brief are that the assesee is a company engaged in the business of providing investment advisor services and acts as technical, industrial, administrative consultant, both in India and abroad. During the course of scrutiny assessment, the A.O. observed that the assessee has claimed payment of salaries and allowances of ₹ 7,14,08,489/- as against ₹ 3,16,68,750/- in the previous year. The AO asked the assessee to furnish the break-up of salary allowances expenses especially the remunerations paid to directors. The assessee submitted that increase is due to appointment of new direct .....

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..... the view that the salary of the new director should be restricted equivalent to the old director, whereas the contention of the appellant is that the new director has been appointed on higher salary because of his academic and business achievements, therefore his salary is commensurate with the quality experience of the new director and as per the business needs of the assessee company. After considering the rival submission I do not agree with the contention of the AO that the salary of the new director should be restricted equivalent to the old director. In this regard, it is a settled principle that under the provisions of 40A (2)(b) the AO cannot restrict the salary of any of the Director without assigning convincing reasons particularl .....

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..... ovisions of section 40A(2)(b) of the Act and partly disallowed remuneration paid to new director. The ld. CIT (A) after considering the asssessee s submission, deleted the disallowance after observing that the salary was paid to the new director as per his qualification and experience in the field for several years and did not find any merit in the finding of the A.O. that salary of the new director cannot exceed the salary of the old director. We find that the company has fixed the remuneration of the new director as per their capabilities and usefulness for the company. The detailed finding recorded by the ld. CIT(A) has not been controverted by the ld. D.R. by bringing any positive material on record, accordingly we do not find any reaso .....

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