Challenged disallowance of commission & bonus to directors under sec. 36(1)(ii) for AY 2006-07 upheld. Disallowance under sec. 14A dismissed.

The appeal involved challenging the disallowance of commission and bonus paid to directors under sec. 36(1)(ii) for Assessment Year 2006-07. The Tribunal and High Court ruled in favor of the assessee, deleting the disallowance as the commission was not receivable as profit or dividend. The disallowance under sec. 14A was dismissed as it was not pressed by the assessee's counsel. Ultimately, the appeal was partly allowed, and the disallowance of commission and bonus to directors was deleted based on previous decisions and court affirmations.

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Issues involved: Appeal against disallowance of commission and bonus paid to directors u/s 36(1)(ii) for Assessment Year 2006-07.

Issue 1 - Disallowance of Commission and Bonus:
The Assessing Officer disallowed &8377; 77,37,965/- paid to directors as commission and bonus under sec. 36(1)(ii) as it could have been paid as profit or dividend. The CIT(A) upheld this disallowance based on a previous decision for the Assessment Year 2005-06. However, the Tribunal reversed the CIT(A)'s order for the same issue in the Assessment Year 2005-06, holding that the commission paid to directors was not receivable as profit or dividend. The High Court also upheld this decision, stating that no question of law arises. The Tribunal's decision in the Assessment Years 2002-03 and 2007-08 also supported the allowance of commission and bonus to directors. Therefore, the disallowance was deleted in favor of the assessee.

Issue 2 - Disallowance under sec. 14A:
Ground No.5 regarding disallowance of &8377; 48,357/- under sec. 14A was not pressed by the assessee's counsel and hence, was dismissed.

In conclusion, the appeal was partly allowed, and the disallowance of commission and bonus to directors under sec. 36(1)(ii) was deleted based on the Tribunal's decisions and the High Court's affirmation.

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