2011 (2) TMI 195

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.... CIT(A) in confirming the disallowance of Rs. 96,380/- on account of salary paid to the Director.   4. Facts of the case, in brief, are that the assessee company is engaged in the business of importer and reseller of rubber products and chemicals. During the course of assessment proceedings, the Assessing Officer noted from the tax audit report and the various submissions filed by the assessee that out of the total salary of Rs. 9,12,144/- paid to its employees, a sum of Rs. 1,23,120/- has been paid to the Managing Director Mr Mazhar Vohra and an amount of Rs. 1,92,760/- paid to the Director Mrs Samina M Vohra . The Assessing Officer asked the assessee to explain as to why such substantial amount paid as remuneration should not be tre....

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....ed from the nature of activity undertaken by the assessee company that there are transactions taking place among the group concerns. Therefore, payment of remuneration to the director in general is excessive and unreasonable.   4.3 After considering the total employees cost shown by the assessee for the year, the Assessing Officer came to the conclusion that services rendered by Mrs Samina Mazhar Vohra does not deserve a much higher salary for signing few correspondence letters and does not convey the legitimate needs of the business or profession. According to him, the company has reduced its net profit by diverting such a substantial and unreasonable amount of remuneration to the lady director. In view of the above, he disallowed an....

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....director (who looks after mere routine work viz-a-vis salary of Rs. 1,23,120/- to the Managing Director is unjustified.   Accordingly, under the facts and circumstances of the case, the disallowance made by the Assessing Officer u/s 40A(2)(b) is upheld."   6. Aggrieved with such order of the CIT(A), the assessee is in appeal here before the Tribunal.   7. I have considered the arguments advanced by the ld DR and perused the orders of the authorities below. There is no dispute to the fact that an amount of Rs. 1,92,760/- has been paid as remuneration to the director Smt Samina Vohra. There is also no dispute to the fact that the above salary paid to the lady director is higher than the salary paid to the Managing Director S....