TaxTMI 
TaxTMI 
2015 (5) TMI 581
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.... the next years because of the Directors efforts. 2. The Learned Commissioner of Income Tax (Appeals) has erred in confirming the order without considering the submissions and the documents produced before him 3. The appellant prays tor appropriate relief based on the said grounds of appeal and the facts and circumstances of the case." 3. From the above grounds it is noticed that only grievance of the assessee relates to the disallowance of Rs. 14,93,657/- made by the AO by invoking the provision and Section 40A(2)(b) of the Income Tax Act, 1961 (hereinafter referred to as the Act in short). 4. The facts of this case in brief are that the assessee filed its return of income on 29.09.2008, declaring a loss of Rs. 30,28,331/-which was processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny. During the course of assessment proceeding, the AO noticed that the assessee had debited employees' remuneration at Rs. 47,87,489/- which included Rs. 27,08,050/- paid to the Directors. The AO pointed out that the salary paid to the Directors was 56.57% of the total salary expenses and 44.60% of the total receipt of Rs. 60,71,967/-. He asked the assessee to give j....
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....this concept a success. In 1991 he has joined the Desert Artisans Handicrafts Pvt. Ltd, Jodhpur, growing to Managing Director by 2007. As Managing Director of DAH, the pilot community owned company (COC), he took the COC to its full potential expanding its base to six locations covering 4 States. He moved to Artisan Micro Finance Pvt. Ltd., New Delhi as a full time Executive Director in 2007 bringing with him 25 years of experience as a grass roots organizer amongst artisans and craft workers in the states of Rajasthan, Madhya Pradesh and involved in forming the COCs and handling existing COCs. Presently, he is overall managing one of the COCs, Desert Artisans Handicrafts Jaipur Limited as Managing Director. Further since they were involved in the group and were expertise in finance & community managed companies respectively. Even before the learned Income Tax Officer the details were submitted regarding - a) the qualification and experience of Directors; b) the fact that they do now own any shares nor have any interest in the company excepting being professional Directors; and c) the remuneration paid to them is not excessive or unreasonable having regard to the fair mark....
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.... on the judgment of the Hon'ble Delhi High Court in the case of Hive Communication (P) Ltd. Vs. CIT reported in [2011] 12 taxmann.com 287. The assessee also submitted efore the Ld. CIT(A) as under:- "1. Ms. Dilpreet Singh was earlier employed with M/s Fabindia Overseas Pvt. Ltd. and was getting a remuneration of Rs. 29,54,990/- as per copy of Form 16 enclosed herewith at Annexure-3. 2. Mr. Prakash Tripathi was earlier employed with M/s. Desert Artisans Handicrafts Pvt. Ltd. and was getting a remuneration of Rs. 13,02,471/- as per copy of Form 16 attached at Annexure-4. Their bio-data and also the proof of work done by them during the year under consideration has also been given vide our letter dated 16.04.2012 and it has been established that because of the work of these directors that the turnover of the company increased three times in three years, The remunerations paid to these directors are in no way excessive or unreasonable and it is only because of their efforts the turnover of the company increased from Rs. 60 lakhs to Rs. 1.72 crores. The profit earned for the year ended 31.03.2011 was Rs. 69.47 lakhs." 6.1 The reliance was placed on the following case laws....
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....also to check such claims. Therefore, the action of the AO is confirmed and the appeal of the appellant is dismissed." 8. Now, the assessee is in appeal. The Ld. counsel for the assessee reiterated the submission made before the authorities below and further submitted that the AO without bringing any material on record was not justified in holding that the remuneration to the Directors was excessive and that the Ld. CIT(A) was not justified in confirming the action of the AO. Ld. counsel for the assessee further submitted that no disallowance was made in the subsequent years, therefore, the disallowance made by the AO and confirmed by the Ld. CIT(A) was not justified. 9. In her rival submissions, the Ld. DR strongly supported the orders of the authorities below and further submitted that the assessee was a loss making concern, but the remuneration given to the Directors was highly excessive. 10. We have considered the rival submission of both the parties and carefully gone through the material available on record. In the present case, it is noticed that one of the Directors, namely, Ms. Dilpreet Singh is a Chartered Accountant and also qualified CPA from the USA. She was e....