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TMI Blog2018 (11) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of assessee. - ITA No.761/Kol/2018 - - - Dated:- 13-7-2018 - Shri N.S.Saini, AM For the Appellant : Shri Rakesh Jain, FCA For the Respondent : Shri Sanjoy Mukherjee, Addl.CIT ORDER PER N.S.SAINI, AM This is an appeal filed by the assessee against the order dated 19.03.2018 of C.I.T-(A)-3, Kolkata for A.Y. 2012-13. 2. The sole issue involved in this appeal of the assessee is that the CIT(A) has erred in confirming the addition of ₹ 2,60,000/- on account of directors remuneration paid to the directors made by the Assessing Officer. 3. The brief facts of the case are that the Assessing Officer observed that the assessee has claimed loss from business of ₹ 3,58,644/- whereas its only busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure of ₹ 5,53,358/-. 5. On appeal the CIT(A) observed that the Assessing Officer was of the opinion that there is no business income to the assessee. The Assessing Officer accordingly disallowed the remuneration paid to directors of ₹ 5,20,000/-. It was contended before him that the directors of the company are entrusted with the responsibility to manage the day to day affairs of the company. It was submitted that during the year the assessee had entered into a property related transaction for which compensation charges of Rs..2,00,000/- was received by the assessee on cancellation of the deal. This receipt of ₹ 2,00,000/- was offered as business income. Accordingly it was submitted that Director s remunera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a higher side and restricted the disallowance to ₹ 2,60,000/-. 11. I find that the Hon ble Gujarat High Court in the case of Corornation Flour Mills vs ACIT 188 Taxman.com 257 has held that In relation to the disallowance under the provisions of section 40A(2) of the Act, a plain reading of the provision reveals that where an assessee incurs any expenditure in respect of which payment is required to be made or has been made to any person referred to in clause (b) of section 40A(2) of the Act and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to (a) fair market value of the goods, services or facilities for which the payment is made ; or (b) the legitimate needs of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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