9911796707
TMI Blog1989 (8) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... company paid Rs. 2,50,000 to its holding company, namely, Sudarsan Trading Company Limited. This amount is an annual payment liable to be paid by the subsidiary company under an agreement, dated May 1, 1973, for the use of services of the managing director and four officers of the holding company for the business of the assessee-company. The agreement provided that 75 percent. of the salary payable by the holding company to the five persons named therein or Rs. 2,50,000, whichever is less, is payable to the holding company for their services being made available by the holding company to the assessee. There was also a provision for taking over the chit business of the assessee-company from the holding company. As the profits of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withstanding anything to the contrary in sections 30 to 39, the amount mentioned in section 40(c) of the Act shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession". The clause empowers the Income-tax Officer to disallow the whole or any part of any expenditure incurred by company which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director or a person who has substantial interest in the company as mentioned in section 2(32) or relative as defined in section 2(41) of a director or of such person if, in the opinion of the Income-tax Officer, any such expenditure is excessive or unreasonable having regard to the legitimate business n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the Revenue. The payment in question was made on contractual basis and it was incurred on account of business expediency. The arrangement was made bona fide and in the interest of the business. The contractual payment has not been shown as colourable or otherwise suspect. That is the finding of the Commissioner of Income-tax (Appeals) as well as of the Tribunal. The appellate authorities also found that the apportionment is justified with reference to the gross turnover. There was nothing to suspect in the payment which was a contractual one made to another company. The Tribunal clearly found that the agreement arrived at by the parties is genuine and bona fide and it was not the case of the Revenue that the said agreement was bogu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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