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TMI Blog2017 (10) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed before CIT(A) that Central Government has granted approval for payment of remuneration to Mr. Kailush Nasta under the provisions of section 334(1B) of the Companies Act, 1956. The approval granted by the Central Government is after considering the special resolution dated 15.03.2009. We gone through the case records and noted that CIT(A) has not considered this aspect while adjudicating the issue. Hence, for the purpose of verification of actual claim approved by Central Government, we restore this issue back to the file of CIT(A). Bogus purchases - whether only the profit element embedded in the bogus purchases is to be taxed instead of whole transaction - Held that:- Actual bogus purchases are at ₹ 56,24,615/- and this shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (Appeals) has erred in confirming the addition of ₹ 7,32,880/- made by the learned assessing officer, being disallowance of part amount of Managerial Remuneration of ₹ 7,32,880/- out of Managerial Remuneration of ₹ 25,32,880/- paid by the appellant company to Mr. Kailash V. Nasta by not appreciating the fact that the expenditure on account of such total remuneration of ₹ 25,32,880/- has been incurred wholly, necessarily exclusively for the purpose of business of the appellant company. 3. We have heard the learned Departmental Representative and gone through the facts and circumstances of the case. We find that the AO has made this addition with reference to remuneration paid to Shri Kailash V. Nasta in exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are enclosed in assessee paper book. It was claimed by the assessee that the incentive of ₹ 7,32,880/- has been paid in the normal course of business activity and therefore the same as allowable under section 37(1) of the Act. 5. We find from the records of the case that the 14 AO while passing the Assessment Order relied on the judgment of Hon'ble Madras High Court in the case of CIT Vs India Cement (2000) 241 ITR 62 (Mad) wherein the Hon ble Madras High Court held that the payment made in contraventions of provisions of section 349 of the Companies Act, 1956 is not allowable under section 37(1) of the Act. We find that the assessee before CIT(A) tried to distinguished the above decision of Hon'ble Madras High Court relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailush Nasta under the provisions of section 334(1B) of the Companies Act, 1956. The approval granted by the Central Government is after considering the special resolution dated 15.03.2009. We gone through the case records and noted that CIT(A) has not considered this aspect while adjudicating the issue. Hence, for the purpose of verification of actual claim approved by Central Government, we restore this issue back to the file of CIT(A). 6. Coming to ITA No. 7307/Mum2014, the only issue in this appeal of Revenue is against the order of CIT(A) restricting the profit at 25% of the total bogus purchases. For this Revenue has raised following ground: - 1. On the facts and the circumstances of the case and in law, the CIT(A) had erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Gujarat High Court in the case of CIT vs. Smith P Seth 356 ITR 803 restricted the disallowance by estimating the profit rate at the rate of 25% by observing in para 3.11 as under: - 3.11 The facts in the present case showing. that the appellant was not in a position to prove the existence of the suppliers. The suppliers were found to be engaged in providing bogus bills without actual delivery of goods. Moreover, these suppliers are not regular parties and they were found to have been supplied only during the year and there were no supply either in the earlier year or in the subsequent year from such parties. I feel this circumstantial evidence itself prove the bogus nature of the transaction. On careful analysis of the finding of Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X
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