IT SEC. 36(1)II

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..... IT SEC. 36(1)II
Query (Issue) Started By: - HITESH MISTRY Dated:- 20-9-2018 Last Reply Date:- 21-9-2018 Income Tax
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Income Tax
Dear Sir, We are having private limited Company. Would like to ask if the management intend to give commission to one of the Director of the Company for her performance during the year. Should Section 36(1)II is applicable for allowing as expense .....

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..... s deductable. Should Company get this commission expense as dedutable? Please have your opinion on this. Regards Hitesh Mistry Reply By DR.MARIAPPAN GOVINDARAJAN: The Reply: In my view it is allowable. Reply By Yash Jain: The Reply: Sir, * Please ensure that commission is within the limit of sec 198 of the Co. Act, 2013 (Reason.: It acts as a strong defence in case of appeals.) * Ensure .....

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..... that commission is variable in nature (Reason.: It will help the company to contend that raise or fall in commission is purely on performance and commission is not just an ad hoc arrangement) . * If your company has given dividends in past years, but director was not paid commission (& director is shareholder), then please arrange for reason that why suddenly need for commission. Officer can st .....

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..... ate that it may be in lieu of dividend and the entire commission can be disallowed. Hence form a strong basis / reasoning for such commission. Eg. substantiate by documenting that due to efforts of director sales and profit increases and hence he get commission. Rgds
Discussion Forum - Knowledge Sharing .....

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