Tribunal allows appeal, directs deletion of disallowed bonus/commission amount under Income Tax Act

The Tribunal allowed the appeal, directing the AO to delete the disallowed amount of Rs. 15,99,169 relating to bonus and commission paid to directors for AY 2014. The Tribunal held that the payments were within legal limits and not subject to disallowance under section 36(1)(ii) of the Income Tax Act, 1961, based on agreements provided to the Revenue. Citing a previous decision in favor of the assessee for AY 2013-14, the Tribunal found the CIT(A)'s reasoning invalid and allowed the grounds of the appellant.

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Issues: Disallowance of bonus and commission paid to directors under section 36(1)(ii) of the Income Tax Act, 1961.

Analysis:
The appeal was against the order of Ld. CIT(A)-4, Kolkata for AY 2014. The appellant contested grounds 2 and 3 relating to the disallowance of bonus and commission paid to directors amounting to Rs. 15,99,169. The Ld. AR argued that since the payments were within the prescribed limit as per Company Law, they should have been allowed. Referring to a previous Tribunal decision, the AR emphasized that a similar issue was resolved in favor of the assessee for AY 2013-14, where the Tribunal allowed the claim based on the interpretation of section 36(1)(ii) of the Act. The Tribunal held that the payments made to directors were within the legal limits and not subject to disallowance based on the agreements provided to the Revenue. The Tribunal found the CIT(A)'s reasoning for disallowance invalid and allowed the grounds of the assessee.

The Tribunal noted that since the issue had already been decided in favor of the assessee in a previous case with no change in facts or law, they followed the previous decision and directed the AO to delete the addition of Rs. 15,99,169. Consequently, the appeal was partly allowed, and the order was pronounced on 5th May, 2021.

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