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TMI Blog2016 (12) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are bad in law and fact. 2. For that only basis of the expenditure shown for the construction of the building treating it improper, the rejection of books of account under section 143(3) of the Act is arbitrary and unjustified. 3. For that the learned CIT(Appeals)-1, Patna has erred in maintaining the disallowance of 50% women's Directors remuneration invoking the provisions of section 40A(2) of the I.T. Act irrespective of the fact that all the case laws cited by the appellant are fully relevant to this case. It is further stated that Dr. Moti Sinha is doing the work as director finance and Dr. Nibha Kumari is doing the work as director sales and service. Without accepting the fact treating it as the remuneration paid is exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above facts, entire remuneration paid to Dr. Nibha Kumari is disallowed u/s 40A(2) of the Act. Further, Dr. Moti Sinha is also renowned gynecologist and Founder of Prashant Memorial Charitable Hospital. She is actively involved in day to day functioning of Prashant Hospital in the capacity of H.O.D. of ODS and GYN Deptt. During the course of hearing, assessee could not justify the payment made to her. The evidence for the work done by her for the company was not furnished. It is quite clear that she is being paid without any work for the company. In view of the above facts, remuneration paid to Dr. Moi Sinha is also disallowed u/s 40A(2) of the Act." 4. Upon assessee's appeal the learned CIT(Appeals) noted the assessee's s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the proper provision was Section 40A(5) and the case did not fall u/s 40A(2). He deleted the entire disallowance. On second appeal the tribunal held that the provision of Section 40A(2) was not applicable and then on reference application before the High Court, made by the department u/s 256 was rejected and hence the petition accordingly dismissed against the revenue and in favour of the assessee. In the case of Deputy Commissioner of Income Tax, Circle 9(1), New Delhi vs. Spark Hotels Pvt. Ltd. (2012) 22 Taxman Com. 257 (Delhi) in which the fact is that the remuneration paid to director @ 3 lacs per month was held by the Assessisng Officer that the remuneration paid is exdessive and disallowed the amount of Rs. 30 lacs, invoking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) fair market value of service or facilities, or (b)legitimate need of business of assessee, or (c) benefits derived by or accruing to assessee on receipt of such service facilities. In the instant case the Assessing Officer has clearly indicated that due to their other pre-occupation Dr. Moti Sinha and Dr. Nibha Kumari would not have the time available to attend to the normal day to day activities sof the appellant's business. Further they did not have any requisite qualifications which would enable them to carry out the functions which has been claimed to have been performed by them. At the same time it has not been entirely disproved that Dr. Moti Sinha and Dr. Nibha Kumari were not concerned with the activities of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not sustainable. The case laws referred by the assessee before the CIT(Appeals) have been distinguished without any cogent reason. 7. In my considered opinion, as already expounded by the Hon'ble Apex Court, the Revenue should not try to sit into the shoes of a businessman and decide how to conduct the business. 8. Accordingly I find that the lady Directors being well qualified persons and associated with the company since earlier period cannot be disallowed the remuneration of 50% as held by the learned CIT(Appeals). Accordingly I set aside the order of learned CIT(Appeals) on this issue and decide the issue in favour of the assessee. 9. In the result, the appeal by the assessee is partly allowed. Order pronounced in the O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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