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TMI Blog2021 (8) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... e, similar payments would have been made to the other shareholders of the company. However, this is not the case. The allegation of Ld. AO that there was violation of the provisions of The Companies Act, is not supported by any concrete material on record. The allegation of Ld. AO that dividend was being paid in the guise of incentive, has no legs to stand since the assessee has substantiate the fact that incentive was paid only against services rendered by Shri Rustom Joshi. Therefore, the additions have rightly been deleted. - Decided in favour of assessee. - I.T.A. No. 6908/Mum/2019 - - - Dated:- 9-8-2021 - Mahavir Singh , Vice President And Manoj Kumar Aggarwal , Member (A) For the Appellant : Usha Gaikwad, Ld. Sr. DR For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, in recognition of his contribution to the business of assessee without drawing any remuneration, the assessee decided to reward Shri Rustom Joshi for his uninterrupted support and effort by paying him special performance incentive of ₹ 250 Lacs. For the said purpose, a Board Resolution was passed and the approval from the shareholders was also taken by passing special resolution in the extra-ordinary general meeting (EGM). The relevant extract from minutes of Board meeting and special resolution passed in the EGM was enclosed. Another plea raised was that Shri Rustom Joshi was assessed at the same rate of tax rate as evidenced by computation of income and assessment order of Shri Rustom Joshi. 2.3. However, finding discrepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the profits of the company doubled within four years of the time, it was decided by a special resolution that Mr. Joshi would be paid special incentive of ₹ 2,50,00,000/-. It was also explained that the resolution was passed by members who are independent and who held 75% or more voting rights of total members present and voting as required in provision of section 114 of the Companies Act, 2013. The Id. Counsel also relied upon the judgments of the Hon'ble Delhi High Court in the case of Shriram Pistons and Rings Ltd. vs. CIT [171 taxmann 81] and also CIT vs. Autopins (India) [192 ITR 161]. I find sufficient force in the arguments of the Id. Counsel which are reproduced above. The Ld.AO applied section 36(1)(ii) of the IT Act f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Id. Counsel also explained the rules and clauses for deciding the upper limits of remuneration payable to the directors of the company as is evident from the submissions which have been reproduced above. It is seen that there is no violation of any section of the Companies Act as the assessee company is an unlisted company. The Ld.AO does not dispute the fact that the amount has been paid to Mr. Joshi for the services rendered by him to the appellant company. His only objection seems to be that as he is a shareholder with 34% shareholding in the company the amount would have been paid to him as dividend and the company would have had to pay dividend distribution tax. The company, in order to avoid payment of dividend distribution tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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