2021 (7) TMI 354

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....ty, the Tribunal), the Revenue has filed the above appeal. 2.1 The assessee company is engaged in the business of construction and sale of residential flat in and around Chennai and also letting out property. The assessee company filed its return of income declaring a taxable income of Rs. 23,86,06,430/-. The return was processed and the case was selected for scrutiny. The scrutiny assessment was completed by making the additions. The additions resulted in an assessed income of Rs. 38.53 crores. During the year under consideration, the assessee company has paid an amount of Rs. 2,66,41,878/- as commission to Mr.N.Ravichandran, who is as the Chairman and Managing Director of the assessee company. According to the assessee, Mr.N.Ravichandr....

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....elated benefits and also holding 95% of total shares of the assessee company entitled for receipt of dividend declared by the assessee company under section 36(1)(ii) of the Income Tax Act? (ii) Whether on the facts and circumstances of the case, the Tribunal was right in holding that the whole time Managing Director of the assessee company who is in receipt of the fixed salary and other salary benefits like other employees of the assessee company is not an employee of the assessee company?" 4. When the appeal is taken up for hearing, M.Swaminathan, learned Senior Standing Counsel appearing for the appellant-revenue fairly submitted that the substantial questions of law that arose for consideration in the above appeal had alread....

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....itled to receive commission for services rendered to the company. It is a term of employment on the basis of whichhe had rendered service. Accordingly, he was entitled to the said amount. Commission was treated as a part and parcel of salary and TDS has been deducted. Ashok Gupta was liable to pay tax on both the salary component and the commission. Payment of dividend is made in terms of the Companies Act, 1956. Dividend has tobe paid to all shareholders equally. This position cannot be disputed by the Revenue. Dividend is a return on investment and not salary or part thereof. Herein the consideration in the form of commission which was paid to Ashok Gupta was forservices rendered by him as per terms of appointment as a Managing D....