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ITAT allowed the assessee's appeal, holding that the disallowance of sums paid as "performance bonus" to director-shareholders was not sustainable. The Tribunal found that the directors constituted the principal technical and administrative resources, rendered special services that procured new orders, and that the bonus was objectively linked to duties performed and commercial objectives evidenced by the resolution dated 16.08.2016 and subsequent achievement of turnover. Consequently the payments qualified as deductible business expenditure, and the AO was directed to delete the addition; the appeal filed by the assessee is allowed.
ITAT allowed the assessee's appeal, holding that the disallowance of sums paid as "performance bonus" to director-shareholders was not sustainable. The Tribunal found that the directors constituted the principal technical and administrative resources, rendered special services that procured new orders, and that the bonus was objectively linked to duties performed and commercial objectives evidenced by the resolution dated 16.08.2016 and subsequent achievement of turnover. Consequently the payments qualified as deductible business expenditure, and the AO was directed to delete the addition; the appeal filed by the assessee is allowed.
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