9911796707
TMI Blog1983 (11) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... wable under section 40A(5). The ITO, therefore, reopened the assessment under section 147(b) of the Act as he had reason to believe that the income chargeable to tax had escaped assessment. He completed this assessment under section 144 of the Act read with section 147(b) on 18-1-1979 holding that an amount of Rs. 85,594 was further disallowable under section 40A(5) in respect of the salary of the aforesaid two employees, viz., Shri P.V. Mehta and Shri E.R. Patel. On an application being made by the assessee under section 146 of the Act, the ITO reopened this ex parte assessment by his order under section 146, dated 29-3-1979. The assessment presently under consideration is the one dated 10-2-1980 made in consequence of the order dated 29-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s place first. The agreements with these two employees had the following important provision : " Provided always that no benefit shall accrue to the party of the first part or his dependents, as the case may be, nor shall party of the first part or his dependents be entitled to have any benefit or to have any right, lien or interest under the aforesaid policies until the date of the first payment of the annuity." The Commissioner (Appeals), however, rejected the assessee's appeal on both the grounds for the detailed reasons mentioned by him in the appellate order. 3. The assessee is, therefore, in further appeal before the Tribunal on the very same aforesaid two grounds. In the first place, it is brought to our notice that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Corpn. Ltd. v. ITO in IT Appeal No. 3032 (Mad.) of 1977-78 reported in 3 ITD 612 where the Special Bench has answered in the affirmative the question whether the word ' remuneration ' in section 40(c)(i) of the Act included commission paid by an assessee to its managing director. 4. We have carefully considered the facts and circumstances of the case and the arguments on either side. The original assessment was completed in this case on 20-1-1976. Thereafter, the ITO proposed sometime in 1977 to rectify the assessment under section 154 of the Act in respect of the excess allowance made on account of the remuneration to the two employees, Shri E.R. Patel and Shri P.V. Mehta. The assessee furnished the entire details by his letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier in extenso. In our opinion, all that the audit party has advised the ITO was that section 40A(5) should have been applied, which apparently had not been applied in the original assessment. All that the audit party has done is to invite the attention of the ITO to a provision of law. In our opinion, the reopening of the assessment under section 147(b) does not in any manner violate against the principle of law as explained by the learned Judges of the Supreme Court in the case of Indian & Eastern Newspaper Society. 5. This brings us to the merit of the addition. The fact is that the employer had paid these two persons Rs. 66,297 and Rs. 89,297 partly in cash and partly by way of deferred annuity. To our mind there is some substance i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
