2013 (5) TMI 822

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....llowance of Director's remuneration amounting to Rs. 87,45,107/- under section 40A(2) of the I.T. Act holding that the same excessive." 2. Rival contentions have been heard and record perused. Facts of the case in brief are that the assesee is a company engaged in the business of providing investment advisor services and acts as technical, industrial, administrative consultant, both in India and abroad. During the course of scrutiny assessment, the A.O. observed that the assessee has claimed payment of salaries and allowances of Rs. 7,14,08,489/- as against Rs. 3,16,68,750/- in the previous year. The AO asked the assessee to furnish the break-up of salary & allowances expenses especially the remunerations paid to directors. The assessee ....

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....during the year under consideration. The A.O is of the view that the salary of the new director should be restricted equivalent to the old director, whereas the contention of the appellant is that the new director has been appointed on higher salary because of his academic and business achievements, therefore his salary is commensurate with the quality experience of the new director and as per the business needs of the assessee company. After considering the rival submission I do not agree with the contention of the AO that the salary of the new director should be restricted equivalent to the old director. In this regard, it is a settled principle that under the provisions of 40A (2)(b) the AO cannot restrict the salary of any of the Direct....