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TMI Blog2017 (9) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... siness stands transformed into a reconstructed old business, because of job work. Therefore, independent status of Unit II cannot be altered as proposed by AO due to job work executed by Unit I. - Decided in favour of assessee. Disallowing bonus/commission paid to the directors of the company - CIT-A allowed claim - Held that:- Revenue has failed to rebut the findings of the ld. CIT(A) which alludes that there was no any ulterior motive of the assessee behind payment of bonus/commission to the working directors of the company. Moreover, the issue has been well decided in favour of the assessee by Hon’ble Delhi High Court in the case of CIT vs. Career Launcher India Ltd. (2012 (4) TMI 440 - DELHI HIGH COURT ) as held so long as the bonus or commission is paid to the directors for services rendered and as part of their terms of employment it has to be allowed and sec.36(l)(ii) does not apply. - Decided in favour of assessee. - ITA No. 2951/Del./2014 - - - Dated:- 20-9-2017 - Shri I.C. Sudhir, Judicial Member And Shri L.P. Sahu, Accountant Member For The Appellant : Sh. Anshu Prakash, Sr. DR For The Respondent : Sh. Suresh Gupta, C.A. ORDER Per L.P. Sahu, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the provisions of sub-sec.(2) of section 80IA, which speaks that the industrial undertaking shall not be formed by split up or the reconstruction of a business already in existence and also shall not be formed by transfer of a new business of machinery or plant previous used for any purpose, the AO disallowed the claim of assessee for deduction u/s. 80IB of ₹ 1,23,60,580/-. The AO also observed that in the present scenario, similar disallowance was also made in A.Yrs. 2001-02 to 2003-04 and 2005-06. In appeal, the ld. CIT(A) deleted the disallowance observing as under : 5.2 Before me, the Ld. AR for the appellant submitted that the AO was not justified in making the disallowance. It was submitted that the issue is covered in favour of the appellant by the order of CIT(A) as well as by the ITAT for the A.Y. 2000-01, 2001-02, 2002-03, 2003-04 and 2005-06. The Ld. AR submitted a copy of ITAT order B Bench dt. 09.09.2011 in support of his claim. 5.3. I have carefully considered the submissions of Ld. AR and perused the order passed by the AO. I have also perused the order of the Ld. CIT(A) as well as of the Hon'ble ITAT. I find that the Hon'ble ITAT vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the assessee that it has claimed deduction u/s 80-IA on the net profits worked out after adjusting the losses of Unit I with profits of Unit II, has not been disputed by the department. With all these facts on record, we are unable to hold that the assessee was indulging in any avoidance of tax. In the entirety of facts and circumstances we find no infirmity in the order of CIT(A) allowing the claim of the assessee. Accordingly we uphold the order of CIT (A) on this court for all the assessment years under consideration . 5.3.1. I find that the AO has made disallowance on the basis of disallowance made during the year 2001-02, 2002-03, 2003-04 2005- 06. There is no change in the facts and circumstances of the case this year. As quoted above the Hon'ble ITAT vide their order dt. 09.09.2011 has decided the issue in favour of the appellant. Respectfully following the 5 above order of the Hon'ble ITAT in appellants own case for earlier years, this issue is decided in the favour of the appellant in this year also. This ground of appeal is allowed. 3. Having considered the submissions of both the parties in the light of above decision of ITAT, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is at lower rate than the tax payable by the directors on the income received as commission. Considering the above facts and circumstances of the case, I hold that the AO was not justified in making the disallowance of ₹ 12,00,000/- and hence, the same cannot be sustained. The addition is therefore, directed to be deleted. The ld. Counsel for the assessee also relied on the decision of Hon ble Delhi High Court in the case of CIT vs. Career Launcher India Ltd., 358 ITR 179 (Del.). 8. Having considered the rival submissions in the light of relevant record on file and the case laws cited by both the parties, we find no justification to discard the findings reached by the ld. CIT(A) in the impugned order. The Revenue has failed to rebut the findings of the ld. CIT(A), as reproduced above, which alludes that there was no any ulterior motive of the assessee behind payment of bonus/commission to the working directors of the company. Moreover, the issue has been well decided in favour of the assessee by Hon ble Delhi High Court in the case of CIT vs. Career Launcher India Ltd. (supra) after considering the decision of Hon ble Bombay High Court in Loyal Motor Service Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent would have been more than the bonus paid and therefore sec,36(1)00 was not applicable. The Tribunal referred to two directors specifically and noted that having regard to their shareholding, they would have been entitled much higher amounts as dividends than the amounts paid to them as bonus. It also recorded a finding that none of the directors would have 9 received bonus as dividend in case bonus was not paid. It also noted that the payment of bonus was supported by a board resolution. 19. The revenue's contention that the Tribunal erred in allowing the bonus payment to the directors cannot be accepted. It has not disputed the facts viz., (a) that the payment was supported by board resolutions and (b) that none of the directors would have received a lesser amount of dividend than the bonus paid to them, having regard to their shareholding. Further, the directors are full-time employees of the company receiving salary. They are all graduates from IIM, Bangalore. Taking all these facts into consideration, it would appear that the bonus was a reward for their work, in addition to the salary paid to them and was in no way related to their shareholding. The bonus payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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