TaxTMI 
TaxTMI 
2015 (4) TMI 945
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....rs 198182 and 198283. Those questions are referred to by the ITAT as per its reference order dated 13.11.1991. The questions are " "1. Whether the commission on sales paid by the assessee constituted "the provisions of any remuneration or benefit or amenity" within the meaning of Section 40(c)(iii) of the Income Tax Act, 1961 ? 2. That in view of the findings recorded by the Tribunal that the claim of commission paid was reasonable, any disallowance under section 40(c) is permissible ?" 2. Shri Dewani, learned counsel for the assessee after narrating the facts has urged that the commission paid to the Directors of assessee was a lumpsum payment, contingent upon the annual turn over and as such could not have been subjected to Section 40[....
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....d the excess. This disallowance has been upheld by CIT (Appeals) and thereafter by ITAT. 5. Perusal of the order passed by the CIT (Appeals) shows that it has relied upon two Special Bench judgments which are mentioned in paragraph no.5 of its order. The judgments of Special Bench in case of I.T.O. .vrs. Sapt Textile Products India Ltd. (ITA No.1304/Bom/79 dated 20.04.1981), is examined by this Court and the appeal of the Assessee - Sapt Textile has been partly allowed. The expenditure on payment of retirement, gratuity to one of the Directors is allowed as not includible under either the provisions of Section 40[c] or Section 40A[5] of the Income Tax Act. This judgment of Division Bench is reported at (1996) 217 ITR 378 (Bom) (Sapt Textil....
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....eing covered by these sections. It is further observed that maximum ceiling in Section 40[c] is clearly in respect of periodic payments only. Conclusion drawn is, payments in both these sections envisage only periodic payments. 7. Here it will be proper to refer to the Division Bench judgment of this Court reported at (1994) 207 ITR 410 (Bom) (Pai Paper and Allied Industries (P) Ltd .vrs. Commissioner of Income Tax). There the commission paid to the Managing Director acting as selling agent fell for consideration and this Court has found that it does not fall under Section 40[c] of the Income Tax Act. Question before this Court in that matter was whether the Tribunal erred in holding that disallowance of a sum of Rs. 1,83,842/out of the am....
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....f the said section. Thereafter in (CIT .vrs. Colgate Palmolive (India) (supra), while considering the provisions under Section 40[c], the Division Bench has found that it deals with remuneration, benefits or amenities to a Director, or any expenditure or allowance in respect of any asset of the company which is used by that person. In the process, it is observed that Section 40[c], describes and refers to such expenditure or allowance as related to a specific period during the previous year. The Division Bench has taken two hypothetical illustrations in that paragraph and thereafter found that the expenditure must be relating to the period comprised in the previous year or specific part thereof. The Hon'ble Apex Court also in case of (B....