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TMI Blog2023 (11) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... ny] - also they do not have substantial educational qualification and do not have special skill related to diamond, except the long association with assessee-company - HELD THAT:- We note that assessee is in the business of manufacturing of polished diamond out of rough diamonds and for that skill is acquired by virtue of experience only. Thus, AO put more emphasis only on education, however, we note that education is different than the experience. In most of the Industries, a person is paid higher salary by virtue of his experience in that Industry. Besides, we note that the payment of salary was made by assessee month-to-month basis and subject to TDS deduction. The salary is paid by cheque. Employees to whom the salaries are being paid are taxed in the higher bracket of 30 % tax rate hence there is no motive to reduce the tax of the company by paying the said salaries. We note that diamond business is a peculiar nature of business and for that confidential and reliable persons are very much required, therefore, assessee would decide that who is reliable persons for his business and how much salary is to be paid. AO cannot sit on the arm chair of the assessee-company`s Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be set aside and that the assessing officer may be restored to the above extent. 5. The assessee craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made. 3. At the outset, Learned Counsel for the assessee, argued that ground no.1 raised by the Revenue is squarely covered in assessee s own case, by the order of the Tribunal, in ITA Nos.102 103/SRT/2017, for AYs. 2013-14 2014-15, order dated 12.07.2019 wherein it was held as follows: 9. Ground No.4 relates to disallowance u/s.14A of the Act. 10. In the assessment order the Assessing Officer had noted that the assessee has claimed interest expenses of Rs. 7,99,24,820/- which includes general interest of Rs. 1,68,53,718/- remaining interest / bank interest considered as directly related to the export / import. The Assessing Officer has further noted that the assessee did not make any disallowance u/s.14A of the Act. The Assessing Officer has asked the assessee why disallowance u/s.14A is not made as company own capital reserves more than inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome only to the extent of 8.05 crores. Therefore, the ld.CIT(A) reasonable presumed that assessee has invested only own funds no borrowed funds. By considering the facts and circumstances of the case, we find that there is no error passed in the order passed by ld.CIT(A), therefore ground raised by the Revenue is dismissed. 12. Ground No.5 in the assessment order, the Assessing Officer noted that the commission amount of Rs. 12,52,434/- was in respect of turnover of earlier years and therefore the same was to be disallowed. The assessee has explained before the Assessing Officer that the commission expenditure accounted for as and when debit note is raised by the broker. The Assessing Officer has not satisfied by the explanation given by the assessee and therefore he has disallowed the entire amount of Rs. 12,52,434/-. 13. On appeal, the ld.CIT(A) deleted the addition made by the Assessing Officer on the ground that the assessee has incurred the expenses, the Assessing Officer has not doubted the genuineness of the expenditure. This expenditure has to be allowed either current year or previous year. 14. On appeal, the ld.Departmental Representative (DR) strongly su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.2 raised by the Revenue is relating to disallowance of salary expenses u/s 40A(2)(b) of the Act, in respect of four (4) relatives of the Directors of Rs. 48,00,000/- (Rs.12,00,000/- x 4). According to the assessing officer, the 4 lady members who have been given the salaries are the shareholders of the assessee-company and the assessee has paid the salaries to these 4 lady members to avoid payment of Dividend Distribution Tax. The second argument of the Assessing Officer was that no evidence was furnished that the said lady members attended office and rendered their services. The Assessing Officer did not accept the contention of the assessee that the salaries to these lady members were regularly paid by cheques and TDS was deducted from the salaries regularly and all the lady members were in higher tax bracket and hence, there was no loss to the Revenue. Accordingly, the Assessing Officer disallowed Rs. 48,00,000/- fully being the total salary paid to the said 4 lady members. 7. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has partly allowed the appeal of the assessee observing as follows: 8.2 I have gon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed being paid wholly and exclusively for the purposes of the business of the assessee. Accordingly, out of Rs. 48,00,000/- disallowed by the assessing officer, the addition of Rs. 19,20,000/- (Rs.4,80,000/- [x] 4) u/s 40A(2)(b) of the Act is sustained. The assessee gets relief of Rs. 28,80,000/-. Ground No.3 is partly allowed. 8. Aggrieved by the order of ld. CIT(A), the Revenue is in further appeal before us. 9. The Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 10. Learned Counsel for the assessee argued that Assessing Officer made addition merely on the issue that assessee has paid the salary to related parties, however, the persons to whom the salary were paid, are not the related party/person, therefore no addition should be made u/s 40A(2)(b) of the Act. 11. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other materia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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