Tribunal remands deduction issue, upholds director fee as subject to TDS.

The Tribunal partially allowed the appeal, remanding the deduction issue under section 80-IB back to the Assessing Officer for reconsideration. The disallowance of director sitting fee for non-deduction of TDS was upheld, confirming the fee as part of remuneration subject to TDS deductions.

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Issues:
1. Enhanced claim of deduction under section 80-IB of the Income-tax Act, 1961 for profits of Agartala unit.
2. Disallowance of director sitting fee for non-deduction of TDS.

Analysis:

Issue 1: Enhanced claim of deduction under section 80-IB:
The appellant contested the CIT(A)'s decision regarding the deduction of Rest. 5,09,98,289 under section 80-IB instead of Rest. 1,52,99,487 for the profits of the Agartala unit. The appellant argued that being set up in the north-eastern region, the unit was eligible for 100% deduction as per the second proviso to sub-section (4) of section 80-IB read with a specific notification. The CIT(A) had restricted the deduction to 30% based on the earlier year's decision, which the appellant challenged. The Tribunal referred to previous judgments and remitted the issue back to the Assessing Officer for reconsideration, emphasizing the need to determine the eligibility for 100% deduction under section 80-IB(4) for the mineral-based industry, giving the appellant an opportunity for a fair hearing.

Issue 2: Disallowance of director sitting fee for non-deduction of TDS:
Regarding the disallowance of &8377; 2,55,000 for director sitting fee due to the non-deduction of TDS, the appellant argued that the provision for TDS on director sitting fees was effective from July 1, 2012, and prior to that, no such requirement existed. The appellant contended that the sitting fee was not part of the director's remuneration and thus not subject to TDS. However, the CIT(A) upheld the disallowance, stating that as per Section 17, any fee paid to an employee, including a director, is considered part of the salary, indicating an employer-employee relationship. The Tribunal agreed with the CIT(A), concluding that the sitting fee constituted remuneration for the director and should have TDS deducted. Therefore, the appeal on this issue was dismissed.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, remanding the issue of deduction under section 80-IB back to the Assessing Officer for proper adjudication. The disallowance of director sitting fee for non-deduction of TDS was upheld, emphasizing the director's fee as part of the remuneration subject to TDS deductions.

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