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TMI Blog2015 (8) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... l the sums are taxable under the head “salary” only. These two directors, while filing the return of income, declared not only the salary but commission also as part of income under the head “salary” The same are assessed as such. Therefore, it is incorrect to hold that bonus or commission shall not form part of salary or remuneration. In accordance with the provisions of section 36(1)(ii) any sum paid to an employee as bonus or commission for services rendered where such sum would, not have been payable to him as profit or dividend if it had not been paid as bonus or commission is allowable. The sum paid to the directors is as an employee of the company. The bonus or commission payable for the services rendered and are in accordance with the terms or employment. The directors are not only shareholders of the company. Therefore, it cannot be said that if the commission was not paid, such sum would have been paid to the employees as profit or dividend. Thus, the exception provided in section 36(1)(ii) do not apply. In such circumstances the amount payable as commission are allowable u/s 36(1)(ii) of the Act. - Decided in favour of assessee. - I.T.A . No.-4776/Del/2012 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned, it would not be exempt income and if this aspect alone is considered than the disallowance would have worked out to ₹ 5,72,651/- as against ₹ 7,98,763/- worked out by the AO. Referring to the impugned order it was submitted that considering these facts the CIT(A) held that the AO has made a disallowance without recording any reason. The CIT(A) it was submitted also recorded the finding that nothing has been brought on record by the AO to hold why the suo moto disallowance made by the assessee of ₹ 97,604/- u/s 14A on facts could not be accepted. Accordingly it was his submission that relying upon the proposition of law as laid down by the Jurisdictional High Court in the case of Maxopp Investment Ltd. vs CIT [2012] 347 ITR 272 (Del.) and followed by another judgements dated 25.11.2014 in the case of CIT vs Taikisha Engineering Ltd. dated 25.11.2015 reported in 2014-TIOL-2239-HC-Del-IT and M/s Jindal Photo Ltd. vs DCIT [2011-TIOL-653-ITAT-DEL] the appeal may be dismissed. Relying further upon the decision of the Co-ordinate Bench in assessee s own case in 2008-09 wherein it was held that Rule 8D cannot be applied for want of recording of requisite satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, attention was invited to order dated 22.01.2015 in ITA No.- 2623/Del/2013 (Assessment year 2008-09) where the issue was decided by the Co-ordinate Bench in following manner:- 4. Ground No. 2 relates to addition of ₹ 13 lakhs being commission paid to Mrs. Malati Kanoria u/s 36(1)(ii) of the Income Tax Act, 1961 (herein after the Act ). The ld CIT(A) has deleted the addition following the order of the ITAT in the case of the assessee company for Assessment Year 2002-03. The ld CIT(A) has held that the facts of the instant year are identical to the Assessment Year 2002-03, inasmuch as the person to whom commission has been paid and the basis of payments remains the same. 5. The ld DR could not point out any fresh fact or distinguishing features so as to make us take a different opinion. On the contrary the appeal filed by the revenue against the order of the Tribunal, stands dismissed by an order of the Hon ble High Court dated 18th February 2011 in ITA No.776/2010. In such a scenario, we find no infirmity in the order impugned. So we dismiss this ground of appeal of revenue. 8.1. Similarly it was submitted that the Co-ordinate Bench vide order dated 20.07.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble ITAT Delhi C Bench in ITA No. 3863/DEL/2007 for the assessment year 2002-03 in the case of appellant company, wherein the Hon ble ITAT has deleted the additions made by the AO on account of. Disallowance of commission paid to Mrs. Malati Kanoria, director of ₹ 7,72,712/- u/s section 36(1)(ii) of the Income Tax Act. The relevant extract of the aforesaid order of the Hon ble ITAT is reproduce below for reference:- 8. We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. The commission is disallowed on the following reasons: - i. the assessee failed to explain the nature of services rendered for payment of commission; and ii. the commission was payable by way of profit or dividend and, hence now allowance u/s 36(1)(ii). 9. We find that both the above reasons are not tenable on facts and as per law. As per terms of employment! these two directors were entitled to monthly remuneration as well as commission. The commission payable was required to be approved by the board of directors. In terms of the resolution passed by the board of, directors, considering the growth in sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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