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TMI Blog2018 (10) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act'). 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the professional fee of Rs. 62,500/- considering the same as prior period expenditure. For this assessee has raised the following ground No. 1: - "1. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming disallowance of professional fees of Rs. 62,500/- as a prior period expenditure." 3. Briefly stated facts relating to this issue are that the assessee has claimed expenses in the profit and loss account on account of legal expenses. The AO noticed that this amount pertains to earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the FY 2010-11 relevant to AY 2011-12. It was claimed that the payment of the said liability crystalised during the year 2011-12 itself and hence, this expense for practical purposes is to be considered as current year charge and hence, it should be allowed. The learned Sr. Departmental Representative, only supported the assessment order and the order of CIT(A). 5. Before us, the assessee relied on the bill raised by advocate and solicitor Shri T. Pooran, wherein professional charges from 01.01.2010 to 31.03.2011 was charged by a consolidated bill dated 21.07.2011 for an amount of Rs. 3,12,501/-. There is no dispute in the facts that the amount of Rs. 62,500/- pertains to the period of 01.01.2010 to 31.03.2010 relevant to AY 2010-11 i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment disallowed part of the remuneration of Rs. 8,41,528/- by invoking the provisions of section 40A(2) of the Act by stating that the payment made was excessive of the limits prescribed under companies Act 1956 and hence, it was in violation of Company Law as no permission was obtained from the Central Government. Further, the remuneration paid during the immediate preceding assessment year was an amount of Rs. 17,04,204/- as against remunerations paid during the current assessment year i.e. Rs. 32,41,528/-. Accordingly, the AO disallowed the part of remuneration of Rs. 8,41,528/- by invoking the provisions of section 40A(2) of the Act. Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the action of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out in 1985 and joined Century Spinning and manufacturing cotton mills as management trainee. It was stated that the managing director was paid remuneration based on qualification, long standing experience in textile industry as per industry norms. It was explained that the assessee filed a detail note on the background and achievements of the managing Director in the Textile field. Further, the remuneration paid to managing director in the previous year cannot be a criterion for invoking the provisions of section 40A(2) of the Act as the assessee's turnover stood at Rs. 283 lakhs as compared to Rs. 99 lakhs in immediately previous year. This has resulted into rise of 185% in turnover. The learned Counsel for the assessee also explained t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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