TaxTMI 
TaxTMI 
2021 (1) TMI 841
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.... Assessment Year 2006-07. The appeal was admitted by a Bench of this Court vide order dated 03.07.2013 on the following substantial question of law: "Whether the appellate authorities were correct in allowing remuneration paid to the Managing Director nearly 90% of the returned income of the assessee company ignoring the applicability of Section 40A(2) and also ignoring the facts that the MD's physical presence was only 15 days in the year and when the Managing Director was not aware of the existence and termination of agreement in favour of SEL wherein huge payments were made by the assessee company under various heads and consequently recorded a perverse finding?" 2. Facts leading to filing of this appeal briefly stated are th....
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....e has filed this appeal. 3. Learned counsel for the revenue submitted that the finding recorded by the Commissioner of Income Tax (Appeals) as well as the tribunal that Managing Director of the assessee has solicited global orders for the products of the assessee is based on surmises and conjectures. Learned counsel for the revenue has also invited our attention to the statement of the Managing Director of the company, which was recorded during post survey enquiry and has pointed out that the answers given by the Managing Director clearly establish his involvement in the business and from perusal of his statement, it is evident that he has expressed his ignorance of any of the contracts signed by the company and any payments made. It is ....
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....icer disallowed the amount paid to the Managing Director solely on the ground that the Managing Director of the assessee stays in India not for more than 14 to 15 days. It is further submitted that the remuneration of the Managing Director has been taxed in the hands of the Managing Director under Section 143(3) of the Act and tax has been deducted at source. It is submitted that the action of the Assessing Officer in disallowing the payment made to the Managing Director amounts to double deduction which is impermissible in law. It is also contended that Managing Director of the assessee is responsible for sales and marketing of the companies products and the remuneration which is paid to him works out to 50% of the total sales. It is furth....
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.... Where the assessee incurs any expenditure in respect of which payment has been or to be made to any person referred to in clause (b) of this sub-sections and the Income-tax Officer is of opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him there from, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction: (b) The persons referred to in clause (a) are the following, namely:- (ii) where the assessee is a company; firm, association of ....