AI Drafter 
TaxTMI 
TaxTMI 
2019 (1) TMI 645
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.... 2. The Appellant Company filed its Return of Income under the provisions of Income Tax Act, 1961 (herein referred to as 'Act') for the Assessment Year 2013-14, Previous Year and Accounting Year being 2012-13, on 30-09-2013. 3. The above Return of Income was processed u/s 143(3) by the Income Tax Officer, Ward 2(1)(1), Bengaluru and passed an order vide order dated 30-06-2015. 4. In the above Assessment Order the Learned Income Tax Officer disallowed the expenditure claimed under the head salaries, which included bonus paid to Directors to the extent of Rs. 17,00,000/-, under section 36(1)(ii) of the Act. 5. The Appellant Company challenged the above disallowance before the Commissioner of Income Tax Appeals-2, Bengaluru who dismissed the Appeal vide order dated 23-11- 2016. 6. This has resulted in taxation of Rs. 17,00,000/- at 30% in the hands of the Company and by virtue of this, the refund available to the Company was reduced by Rs. 5,25,368/-. 7. The Directors of the Company, on the other hand, had included the bonus amount of Rs. 17, 00,000/- in their respective Income Tax Returns during the Assessment Year 2014-15 an....
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....ng the Appeal before the Income Tax Appellate Tribunal, now, at this stage, results in a delay of 571 days. 17. The Appellant faithfully submits that the delay of 571 days in filing the appeal before Tribunal was due to the reasons narrated in the preceding paragraphs. No sooner the Principal Commissioner of Income Tax-2, Bengaluru rejected the application filed before him u/s 119 of the Act, the Appellant reviewed the whole matter, once again, and decided to come up before this Honorable Court, in appeal, without delaying further. 18. The appellant did not have any other mala fide intention in delaying the appeal. 19. The issue involved in the appeal is of very high importance, "whether an income can be taxed twice" "whether an income, already taxed by disallowance of expenditure, can be taxed in the hands of the Directors as income". 20. Submit the above the Appellant hereby humbly prays this Honorable Court the delay of 571 days in filing the appeal may kindly be condoned and the appeal may be admitted for the hearing." 3. Accordingly the ld. AR requested for condonation of delay of 571 days in filing the appeal before this Tribunal. 4. ....
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....erefore, the issue raised by the assessee on merit stands squarely covered by the above judgments in favour of assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. 6. The assessee filed an appeal stating that it was pursuing alternative remedy before the lower authorities. In support of the same, the assessee has filed documents in the form of condonation petition before Pr. CIT-II, Bangalore dated 16.02.2017 and 11.06.2018, copy of revised return of directors dated 15.02.2018. The revenue has not filed any counter affidavit to deny the facts brought on record by the assessee. Being so, in my opinion, when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. In the case on hand, the issue on merits of allowability of expenditure towards bonus in the hands of assessee is covered in favour of assessee by the judgments cited supra. It is not the case of revenue that the assessee filed appeal belatedly deliberately. Therefor....
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....ee by persons responsible for the growth, profitability, branding and day to day functioning. It was further submitted that the assessee deducted taxes at source of Rs, 2,62,652/- from the amounts paid to the Director shareholders at the rate of 30.9% and that such bonus has also been included as income in the hands of the recipients in their personal tax assessment. There was therefore no intention on the part of the assessee or the Director shareholders to evade tax. Since the amount has already been taxed in the hands of the company, by disallowing the same as not an allowable expenditure, the same cannot be added in the hands of the director. Reliance was placed on the decision of the ITAT Mumbai in the case of Mrs Bakhtawar B Dubash v DCIT, Central Mumbai 2009-TIOL-288-ITAT-MUM. It is well-settled legal proposition of taxation that no income should be tax doubled though the recipient is changed as held by the ITAT Mumbai Bench in the case of SSKI Investor Services Pvt Ltd v DCIT, Central Mumbai 120091 34 SOT 412 (ITAT[MUM]). The ld. AR further relied on the following decisions:- - CIT v. Career Launcher India Ltd., 358 ITR 179 (Del) - CIT vs. Convertech Equip....
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....e tune of Rs. 17 lakhs has been paid to two director shareholders, viz., Ms. Namrata Shilpi and Ms. Umadevi S.Y., at Rs. 8.5 lakhs each. This is authorized by the Board Resolution dated 12.04.2012 which is placed on record at page 33 of the PB. These two persons are duly qualified and experienced as follows:- "Directors' profile (refer www.ecandor.com) Umadevi S Y is a pioneer in the payroll outsourcing space and has over 23 years of experience in setting up and running HR & Accounting functions with a strong focus on Payroll & Statutory Compliance. Having spent over 10 years in the complex environment of BPL Ltd. her strong entrepreneurial spirit and deep insight on the potential opportunity encouraged her to set up her own firm in this space. She has been a part of the transition period of handling manual to computerized processes and is sought out by multiple payroll software companies to provide thought leadership in this space. Uma has done her M.Com. & is a 1st Rank Holder and Gold Medalist in Business Taxation from Mysore University N. Shilpi brings over 21 years of cross functional experience in Business Process Management, Quality Co....
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....ance-sheet of the assessee placed on record also indicated that the two shareholders also held directorial positions in the assessee. The deductions claimed by the assessee under section 36(1)(iii) of the Act in respect of the bonuses paid to its shareholder-employees was allowable. AMD Metplast P. Ltd. (supra) Held, allowing the appeal, that A was the managing director and in terms of the board resolution was entitled to receive commission for services rendered to the company. It was a term of employment on the basis of which he had rendered service. Accordingly, he was entitled to the amount. Commission was treated as a part and parcel of salary and tax had been deducted at source. A was liable to pay tax on both the salary component and the commission. The payment of dividend was made in terms of the Companies Act, 1956. The dividend had to be paid to all shareholders equally. This position could not be disputed by the Revenue. Dividend was a return on investment and not salary or part thereof. 15. In the present case, as discussed earlier, the partners are duly qualified and they have participated in the day to day affairs of the assessee company and paymen....