TaxTMI 
TaxTMI 
2021 (1) TMI 286
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....come Tax Act, 1961 (hereinafter called 'the Act). 2.0 The brief facts of the case are that the assessee company is engaged in the business of publishing books for the school students. The return of income was filed declaring taxable income of Rs. 3,99,96,730/-. After processing of the return, the assessee's case was selected for scrutiny. During the course of assessment proceedings, it was noticed by the Assessing Officer that there was an exponential increase in the Directors' remuneration whereas the salaries of other employees had remained static. The assessee had debited Rs. 84,00,000/- as Directors' remuneration which the Assessing Officer held to be a colorable device to siphon the profits of the assessee company. The Assessing Offic....
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.... at the time of hearing of appeal." 3.0 The Ld. Authorized Representative submitted that undisputedly there was a substantial increase in the salary of the Directors during the year under consideration but it was to be appreciated that there had been no increase in the salary since April, 2007, whereas the financial performance of the company had improved considerably with there being a quantum jump in the turnover and the net profits of the assessee company during the preceding five assessment years. The Ld. Authorized Representative submitted that the Assessing Officer had made the disallowance in an arbitrary manner without brining on record any comparable cases where the salary for similar work to people having similar qualifications ....
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....ficer has not brought any comparable cases on record to establish and buttress his allegation that the salary paid to the Directors was excessive as compared to the salary being paid to similar persons with similar qualifications and experience. The Ld. CIT (A), though has given partial relief to the assessee by limiting the disallowance to Rs. 12,60,000/-, also did not consider this aspect of the case and has reduced the disallowance in an ad hoc manner. It is also undisputed that the assessee company as well as Directors both are in the same tax bracket, which is the highest in their cases and, therefore, there can be no question of any evasion of tax by paying remuneration to the Directors. The CBDT Circular No.6-P dated 6th July, 1968 c....