TaxTMI 
TaxTMI 
2012 (6) TMI 267
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.... involved in all these appeals relates to allowability of the commission paid to Shri Sucha Singh, Managing Director of the company under section 36(1)(ii) of the Income-tax Act, 1961. In the appeals of assessee, this is the only issue involved, whereas in the appeal of revenue apart from this issue, two more grounds of appeal have been taken, which relates to allowance of depreciation on computer peripheral @ 60% and, deletion of Rs.20,06,234, which was added by the Assessing Officer by making a disallowance out of miscellaneous expenses. 2. First, we take the common issue involved in all the three appeals relating to allowability of commission paid to Sardar Sucha Singh, MD of the assessee company under sec. 36(1)(ii) of the Income-tax....
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....8 27,11,510 Disallowed Disallowed Pending 4. At the end 31.3.2004, the total share capital of the assessee was Rs.1,00,02,000. The total number of shares were 1000200. These shares were possessed by four individuals and one company, namely, Sucha Singh 40,000, Harjinder Kaur 16,000, Amardeep Singh 15,020, Paramjeet Singh 25,000, Coil Company INC 4000. Up to the end of March 31,2009, this status remained as it is. The one more important fact required to be noted here is that turnover of the company in assessment year 2000-01 was Rs.837,17,395 and it increased to Rs.3112,09,597 in assessment year 2007-08. According to the Assessing Officer, assessee has not distributed the dividend from the very inception and the amount of comm....
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....uarely covered in favour of the assessee by the decision of Hon'ble Delhi High Court rendered in the case of CIT v. Bony Polymers Pvt. Ltd. passed in ITA No. 69/2011 and other appeals. He placed on record copy of the Hon'ble High Court's decision. He further relied upon the order of the ITAT passed in the case of M/s. Creative Travels Pvt. Ltd. v. ACIT in ITA No. 394/Del/09 for assessment years 2005-06 and 2006-07 and pointed out that both these orders have been upheld by the Hon'ble High Court. He placed on record copy of the Hon'ble High Court's decision in the case of CIT v. Creative Travels passed in ITA No. 1283/2011. The learned counsel for the assessee further relied upon the decision of Hon'ble Delhi High Court in the case of AMD Me....
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....the shareholding pattern of the assessee. It is pertinent to observe that in the relevant year Sardar Sucha Singh was holding just 39.9% of the total shareholding and rest of the shares are being held by other individuals or by the company. Being a private limited company, controlled by the family members, a resolution approving the payment of commission to the working directors may not be very difficult task but whether this arrangement indicates that if this commission was not paid to the working director then it would be received in the shape of profit/dividend. If we look towards the shareholding pattern then only 39.9% of this commission paid would be paid to Shri Sucha Singh on the basis of the shares held by him. The other shareholde....
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....the outset pointed out that this issue is covered in favour of the assessee by the decision of Hon'ble Delhi High Court rendered in the case of BSES. 12. With the assistance of learned representative, we have gone through the record carefully. Learned CIT(Appeals) has allowed the depreciation on the computer peripheral @ 60% by putting reliance upon the order of the Hon'ble Delhi High Court rendered in the case of CIT v. BSES Rajdhani Powers Ltd. in ITA No. 1266/2010. Learned CIT(Appeals) also made reference to the order of the ITAT passed in the case of ITO v. Simron Majumdar reported in 98 ITD 119. Considering the order of Learned CIT(Appeals), we are of the view that the learned first appellate authority has rightly placed its relianc....
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....ned CIT(Appeals), Assessing Officer has just granted seven days time for submitting its explanation on this issue and the time was not sufficient. Learned first appellate authority has reproduced the order sheet entries of the Assessing Officer in paragraph No. 17, before arriving at a conclusion that assessee was not provided sufficient opportunity of hearing. Learned CIT(Appeals) thereafter gone through the evidence and deleted the addition. 15. With the assistance of learned representatives, we have gone through the record carefully. As far as entertainment of additional evidence is concerned, we do not find any error in the order of the Learned CIT(Appeals). But sub-rule (3) of Rule 46A suggests that learned first appellate authority....