TaxTMI 
TaxTMI 
2019 (6) TMI 138
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase and in law, the Ld. CIT(A) was right in deleting the addition made u/s 36 (1)(i1) of the Act to the tune of Ps 42,11,363/- on account of commission paid to director Shri Alpesh Gandhi without appreciating the fact that the payments was more than other directors without justification and it was nothing but payment in lieu of dividend ?" 3. Brief facts relating to the issue of disallowance of commission made by AO and deleted by CIT(A) is that the assessee has paid commission of Rs. 42,11,363/- to Mr. Alpesh Gandhi, who is assessee's Executive Director. The AO disallowed this commission by observing that Alpesh Gandhi is getting double remuneration double than other directors without rendering any service that he is rendered in extra services for payment of this double commission in addition to services rendered as liable for which salary has been paid to him. The AO also noted that no dividend has been paid or declared by the assessee. Hence, he added the commission paid to Alpesh Gandhi by invoking the provisions of section 36(1)(iii) of the Act. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) noted from the submissions of the assessee that the AO itself adm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anagement of the Company * Development of local marketing strategy * New product development * Formulation of pricing policy * Customer relationship management * Business development strategy for overseas market * Attending various exhibitions/ seminars related to product of the Company * Process improvement and technological improvement * Procurement of latest machineries for achieving operational efficiency * Production planning * Financial management * Scouting and evaluation of expansion opportunities. 6. We noted that the sales of assessee company have increased by Rs. 2,15,92,232/- as compared to total sales of FY 2010-11 i.e. by 25.58%. The assessee company filed details that there is an increase in customer basis by 76 customers, where sales are more than of Rs. 50,000/-. It was contended that out of increase in total sales of Rs. 2,15,02,232/- as narrated above the sales of Rs. 1,07,25,036/- i.e. almost 50% is from this new customers. It was contended that even the export sales have grown by 45.52%. It was also contended that there is substantial increase in profit before tax as compared to earlier and i.e. by 48.23%. In view of this facts, were are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of Reliance Utilities & Power Ltd. (313 ITR 340) mentioned above, I hold that the disallowance cannot be sustained. Accordingly, I delete the disallowance of Rs. 24,61,097/-. In the result, the ground of appeal is allowed." On the basis of the above, the CIT(A) deleted the addition. Aggrieved, Revenue is in appeal before us. 9. We have considered the factual aspect and noted that the assessee's own capital i.e. interest free funds available as on 31.03.2012 is Rs. 5,30,46,131/- as against the investment made in capital work in progress at Rs. 2,32,02,581/-. Even non business investment is Rs. 36,49,657/-. It means that the assessee's own interest free funds are more than the investment made in non-business investments. The CIT(A) has rightly deleted the addition. Hence, we confirm the order of CIT(A). This issue of Revenue's appeal is dismissed. 10. The next issue in this appeal of Revenue is against the order of CIT(A) deleting the disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Rules,1962. Even the disallowance was made while computing the book profit under section 115JB of the Act also. Fort t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ture incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income." When this was confronted to the learned Departmental Representative he could not controvert the above factual position. 12. As the issue is squarely covered, we are directed the AO to restrict the disallowance of expenses under Rule 8D(2)(ii) and (iii) at Rs. 19,500/-. The provisions of section 14A read with rule 8D of the Rules will not apply, where income is computed on the basis of book profit under section 115JB of the Act as held by special bench of this Tribunal in the case ACIT vs. Vireet Investments (P.) Ltd. [2017] 58 ITR(T) 313 (Delhi - ....