TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 885
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....p; (1) The Hon'ble Tribunal had proceeded on the footing that Mr. Ajay Sukhwani was paid Rs.3,60,000/- as salary and an additional sum of Rs.3,60,000/- as consultation charges and in addition thereto Mr. Ajay Sukhwani had a business income of Rs.2,82,534/-. The Tribunal erred in not appreciating that Mr. Ajay Sukhwani was paid only the consultation charges of Rs.3,60,000/- and not Rs.7,20,000/- as stated by the Tribunal. Further, the said consultation income has been offered under the Head 'income from Business and Profession' at Rs. 2,82,534/- after reducing the expenditure incurred by the assessee. Therefore, the income of Rs.2,82,534/- is not from some other business but is the same consultation charges which Mr. Ajay Sukhwani has received from the Applicant. The Applicant submits that the whole basis of deciding the appeal that Mr. Ajay Sukhwani has received Rs.3,60,000/- + Rs. 3,60,000/- from the Applicant and has an additional business income of Rs.2,82,534/- is factually incorrect and, therefore, there is a mistake apparent from the record, and the order of the Tribunal ought to be recalled. (2) The decision....
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....lso not raised this issue at the time of the hearing, the Applicant had no opportunity to explain the same. The Tribunal failed to appreciate that a person can be a Director in more than one company, however, he can be a working Director in one of the said companies. Therefore, the order of the Tribunal raises a mistake apparent from the record. (5) The Tribunal has held that the A.R. could not point out as to what extra services were offered by Mr. Ajay Sukhwani for the extra incentive of Rs.10 lakhs paid to him. The Tribunal erred in not appreciating that under section 40A(2)(b) of the Act what has to be seen is whether Rs.13,60,000/- as paid to Mr. Ajay Sukhwani is reasonable on the basis of the services rendered by him and not whether the additional Rs.10 Lakhs has been paid in the relevant year for any extra services which have been rendered by him. The Tribunal erred in not appreciating that, incentive payment is never on the basis of extra services rendered by any person, as the same would be in the nature of overtime payment. The Applicant submits that the order of the Tribunal treating incentive akin to an overtime payment is a m....
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.... claimed to be paid by the assessee to the said Mr. Ajay Sukhwani which was disallowed by the AO. The assessee preferred appeal before the CIT(A). 5. In the statement of facts submitted before the ld. CIT(A) duly signed by Mr. Assan Sukhwani, another Director of the company, the assessee had specifically mentioned that a sum of Rs.13,60,000/- was paid by the assessee to Mr. Ajay Sukhwani which includes a salary payment of Rs.3,60,000/-. Under "Consultation charges paid to related parties" Rs.9,60,000/- has been claimed of which a sum of Rs.3,60,000/- has been shown to be paid to Mr. Ajay Sukhwani, which deduction has been separately claimed under the head "Incentive to directors". Further, the ld. CIT(A) vide order dated 21.09.10 though confirmed the disallowance of payment of Rs.30,00,000/- paid as incentive to the directors including Rs.10,00,000/- to Mr. Ajay Sukhwani, allowed the payment of consultation charges of Rs.9,60,000/- to related parties including a payment of Rs.3,60,000/- to Mr. Ajay Sukhwani. Thus, the assessee claimed the total payment of Rs.17,20,000/- to Mr. Ajay Sukhwani out of which a claim of deduction of Rs.7,20,000/- had already been allowed to the assessee....
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....elaboration. However, a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. Merely because a decision cited by the assessee has not been discussed in the order that itself cannot be said to be a mistake apparent on the record of law especially when the said decision has no bearing on the ultimate conclusion arrived at by the Tribunal. The pleading of the assessee that there was no evasion of tax as the directors had paid taxes at the highest rate is not correct. It may be observed that the company has paid the amount in question to the directors as incentives to escape from the provisions of section '115.O' of the Act. If the said amount would have been paid by the company to the directors as dividend, the company would have been liable to pay additional tax at the rate of 12.5% (which has been increased to 15% by Finance Act, 2007 w.e.f. 01.04.07) which the company tried to avoid by paying the amount in question as incentives and not as dividend to the directors. So the pleading that there was no attempt to evade tax is wrong and false, hence the case law re....
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....ed by the assessee in this respect will be required to be deleted and accordingly the incentive claim as allowed to the other two directors of the company at the rate of Rs.3,60,000/- is to be allowed to Mr. Ajay Sukhwani. The net tax effect of any such disallowance/deduction will be nil in that event also. 12. The rest of the averments made in sub para numbers (5) to (7) of Para 2.I of the application are the contentions of the assessee raised on merits of the case and do not point out any mistake apparent on the record. 13. The assessee earlier claimed deduction of Rs.7,20,000/- on account of payment of Rs.3,60,000/- as salary and further payment of Rs.3,60,000/- as consultation charges to Mr. Ajay Sukhwani which was allowed by the authorities below, now, when it has failed in its attempt to convince the Tribunal about justification of payment of another Rs.10,00,000/- as incentive to Mr. Ajay Sukhwani has come up with the plea that the earlier deduction of expenditure at Rs.3,60,000/- paid to Mr. Ajay Sukhwani as salary was wrongly claimed by the assessee. One more interesting fact on the file is that the assessee after the assessment order dated 24.11.09 had made an applicati....