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TMI Blog2020 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... educing the loss is permitted as per law and the same cannot be equated with colourable device. Since the company felt that remuneration paid to the Managing Director was reasonable, burden shifts on the revenue to make out a case of fair value of remuneration with reference to identical facts and comparable cases apropos to the services rendered by the Managing Director. No such exercise was made by the AO. Therefore, we hold that the Ld. CIT(A) erred in upholding the decision of the AO in confirming the addition, hence, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. As observed from the order of the AO, the case was selected for scrutiny for limited purpose of verifying whether the deduction claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also placed the medical certificate, supporting the treatment undergone by Smt.Tulasi, wife of the assessee. We have heard both the parties and condone the delay. 3. The only issue in this appeal is related to the remuneration paid to the Managing Director. During the course of assessment proceedings, the AO found that the assessee has paid the remuneration of ₹ 3,00,00,000/- to Sri Tulasi Ramachandra Prabhu, Managing Director of the assessee company. During the year under consideration the company has no turnover except the interest income and the capital gains. In the immediately preceding assessment year, the AO found that the Managing Director was paid the remuneration of ₹ 30,00,000/-. Since there was no business in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration, the assessee has sold the property for a sum of ₹ 6.30 crores and offered the same as capital gains. The Ld.CIT(A) further observed that the assessee could not establish with cogent evidence to show that the payment was made to the Managing Director on prudent business lines. The Ld.CIT(A) further viewed that the payment made to the Managing Director is excessive and accordingly held that the transaction is a colourable device, since the Managing Director was having losses and set off the losses against the remuneration paid by the company. Accordingly confirmed the addition made by the AO and dismissed the appeal of the assessee. 5. Against which the assessee is in appeal before this Tribunal. During t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses in the hands of the Managing Director, thus the same was colourabe device, hence, argued that the Ld.CIT(A) has rightly restricted the disallowance and no interference is called for. 7. We have heard both the parties and perused the material placed on record. In this case, the company has paid the remuneration of ₹ 3,00,00,000/- which the AO viewed that the remuneration paid was excessive compared to the turnover of the company. According to the AO, there was no turnover in the year under consideration, hence, held that there is no justification for payment of remuneration of ₹ 3.00 crores and arrived at the remuneration of ₹ 30,00,000/- as reasonable and disallowed the remaining amount of ₹ 2,70,00,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anaging Director was reasonable, burden shifts on the revenue to make out a case of fair value of remuneration with reference to identical facts and comparable cases apropos to the services rendered by the Managing Director. No such exercise was made by the AO. Therefore, we hold that the Ld. CIT(A) erred in upholding the decision of the AO in confirming the addition, hence, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. 7.1. In addition to the above, as observed from the order of the AO, the case was selected for scrutiny for limited purpose of verifying whether the deduction claimed on account of business loss is admissible or not. The AO did not make any discussion on the deductibility or otherwise of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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