9911796707
TMI Blog2020 (3) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... rerogative of the assessee to decide the remuneration etc to be paid to the persons who work for his company. As per the agreement, six directors, who were also share holders, were paid additional salary termed as commission and there are four employees who are also share holders who also have been paid salary with additional salary termed as commission . The total commission comes to 0.5% of the total turnover. In our humble opinion, considering the nature of the business of the assessee vis-a-vis the turnover, such payment of commission cannot be doubted. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). Thus, Ground No. 2 also stands dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... are not reliable and suffers from defects. The Assessing Officer further observed that the accounts with the parties are also not correctly maintained/reconciled showing thereby absurd figures. 8. In the light of these facts, the Assessing Officer rejected the books of account u/s 145(3) of the Act and proceeded to estimate profit. The Assessing Officer observed that the gross profit of 3.39% shown by the assessee is very low and estimated the same at 10.5% and made addition of ₹ 10,52,65,260/-. 9. The assessee strongly agitated the addition before the ld. CIT(A). It was strongly contended before the ld. CIT(A) that the Assessing Officer has proceeded on wrong assumption of facts and there is no discrepancy and no bogus purchases/unverifiable purchases. It was brought to the notice of the ld. CIT(A) that the assessee has maintained complete day-to-day stock register, which was examined by the Assessing Officer during the course of scrutiny assessment proceedings. 10. A complete g.p. chart was given and it was brought to the notice of the ld. CIT(A) that book results have been accepted in earlier years and in subsequent years and no addition has been made on account of g. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of Asstt. Order. ₹ 10,47,804/- On account of difference in the cl. Bal of 2 parties as per books of assessee vis-a-vs books of said parties vide Para - 4 of Asstt. Oder. ₹ 73,98,994/- To protect the leakage of revenue by assuming that sales discount to the extent of 0.5% has been allowed excessively/ lowering selling price, thereby calculating 0.5% on total turnover of ₹ 147.98 crores vide Para 5 of the asstt. order. ₹ 8,97,23,590/- 16. A perusal of the detailed summary filed by the assessee shows that the Assessing Officer has added in some cases opening balance and cash payments made during the year and in some cases opening balances have been treated as purchases. In our considered opinion, opening balances relate to the purchases made in earlier years which have been accepted by the Assessing Officer while framing assessment for earlier Assessment Years. 17. From the details, we find that the payments for all the purchases have been made through banking channel in subsequent Assessment Year i.e. 2012-13. Further, we find that total turnover of the assessee during the years is ₹ 147.98 crores and purchases relating to 16 parties marked b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 7,31,852/- 26.82% Shri Davinder Pal Singh Director+Major Shareholders ₹ 2,40,000/- ₹ 7,31,852/ 26.82% Shri Gurmeet Singh Director+Major Shareholders ₹ 2,40,000/- ₹ 7,31,852/ 21.26% Shri Rasvinder Kaur Director+Major Shareholders ₹ 1,92,000/ ₹ 7,31,852/ 12.65% Shri Gurjeet Singh Shareholders ₹ 1,92,000/ ₹ 7,31,851/- 5.77% Shri Jasmeet Singh Shareholders ₹ 1,92,000/ ₹ 7,31,851/- 6.28% Mrs. Jyotsna Singh Shareholders ₹ 1,92,000/ ₹ 7,31,852/- 0.1% Mrs. Baljeet Kaur Shareholders ₹ 1,92,000/ ₹ 7,31,852/- 0.1% Shri Simarpreet Singh Shareholders ₹ 1,92,000/ ₹ 7,31,851/ 0.1% Shri Manmeet Singh Shareholders ₹ 1,92,000/- ₹ 7,31,851/ 0.06% Shri Iqbal Singh - - - - ₹ 73,18,516/ - 100% 23. The assessee was asked to show cause as to why the commission paid to directors should not be disallowed in view of the specific provisions of section 36(1)(ii) of the Act. It was explained that remuneration of the directors has been fixed in the form of monthly salary plus annual commission and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commission paid to the directors was part of the salary and cannot be considered for the purpose of disallowance u/s 36(1)(ii) of the Act. The Hon'ble High Court has reiterated the above view in the case of CIT vs Carrier Launcher India Ltd. 250 CTR 240. In view of the above facts and circumstances of the case and judicial pronouncement of the jurisdictional High Court, the disallowance made by the AO cannot be sustained and hence the same is directed to be deleted. These grounds of appeal are allowed." Since, the facts of this year are identical with the facts of the A.Y. 2010-11 and commission has been allowed to the Directors cum shareholders during the year as was done in A.Y. 2010-11, therefore, the decision of A.Y. 2010-11 of CIT(A)-IV is squarely applicable to the A.Y. 2011-12. Hence, the disallowance of commission payment to Directors cum shareholders is deleted. In the result, this ground of appeal is allowed." 27. Before us, the ld. DR strongly supported the findings of the Assessing Officer. It is the say of the ld. DR that payment of commission to the directors was made without any documentary evidences of Board's resolution to make such payments. The ld. DR stron ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
