TaxTMI 
TaxTMI 
2020 (12) TMI 14
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....a delay of 67 days in filing the appeal. The assessee filed condonation petition, stating that the assessee's wife diagnosed with cancer, consequently he has to spend lot of time in attending to her and getting the treatment to his wife and in the process, the assessee could not file the appeal before the time allowed under the Act. The assessee also placed the medical certificate, supporting the treatment undergone by Smt.Tulasi, wife of the assessee. We have heard both the parties and condone the delay. 3. The only issue in this appeal is related to the remuneration paid to the Managing Director. During the course of assessment proceedings, the AO found that the assessee has paid the remuneration of Rs. 3,00,00,000/- to Sri Tulasi Rama....
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.... to delete the addition. The Ld.CIT(A) observed that the assessee company has sold the property and received the sale consideration. In the earlier years, the remuneration paid was only Rs. 30,00,000/-, as against which the assessee has paid the remuneration of Rs. 3,00,00,000/-, which is unreasonable. During the year under consideration, the assessee has sold the property for a sum of Rs. 6.30 crores and offered the same as capital gains. The Ld.CIT(A) further observed that the assessee could not establish with cogent evidence to show that the payment was made to the Managing Director on prudent business lines. The Ld.CIT(A) further viewed that the payment made to the Managing Director is excessive and accordingly held that the transact....
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....age No.4 of the assessment order, wherein, the Managing Director has paid the taxes of Rs. 17,049/- after set off of losses from business. Thus argued that higher remuneration was paid to the Managing Director with an intention to reduce the tax burden in the hands of the assessee company and to reduce the losses in the hands of the Managing Director, thus the same was colourabe device, hence, argued that the Ld.CIT(A) has rightly restricted the disallowance and no interference is called for. 7. We have heard both the parties and perused the material placed on record. In this case, the company has paid the remuneration of Rs. 3,00,00,000/- which the AO viewed that the remuneration paid was excessive compared to the turnover of the compan....
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....concluded that the payment of remuneration is a colorable device. Incorrect allowance of loss also is having potential tax effect, thus the reducing the loss is permitted as per law and the same cannot be equated with colourable device. Since the company felt that remuneration paid to the Managing Director was reasonable, burden shifts on the revenue to make out a case of fair value of remuneration with reference to identical facts and comparable cases apropos to the services rendered by the Managing Director. No such exercise was made by the AO. Therefore, we hold that the Ld. CIT(A) erred in upholding the decision of the AO in confirming the addition, hence, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. ....