TaxTMI 
TaxTMI 
2021 (7) TMI 1184
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....ppellant is opposed to law, arbitrary and unjustified. 2. The Lower authorities erred in entering findings which are beyond the parameters of the allegations made in the proposition notices dated 18.07.2017 and 29.08.2017. 3. The CIT(Appeals) erred in upholding the disallowance of Rs. 3,82,10,387/- under Section 40A(2) though there is no violation of any provision of law nor is there any evasion of tax which is the crux of Section 40A(2) read with Circular 6-P of 1968. 4. The Lower Authorities erred by not following the principles laid down in Circular 6-P of 1968 which is binding on the departmental authorities as held in various judicial precedents. 5. The Lower Authorities erred in deciding about reaso....
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....the Act. The return was processed under section 143(1) of the Act and notice under section 143(2) was issued to assessee. In response to statutory notices, representative of assessee appeared before the Ld. AO and filed requisite details as called for. 2.1. The Ld. AO on perusal of records noted that, assessee paid to directors of the company in the form of salary and commission, which was more than what was remunerated in the immediately preceding assessment year. The Ld. AO noted that the turnover dropped during the year under consideration and the profit was also less as compared to the previous years. However, the Ld. AO noted that the amount paid to the director was double without any basis. The Ld. AO considered it to be unreasonab....
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....o evade tax. 3.3. The Ld. CIT(A) rejected contentions of the assessee and upheld the addition made by Ld. AO. 3.4. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us now. 4. We have perused the submissions advanced by both sides in light of records placed before us. 4.1. The only issue alleged before us is regarding disallowance upheld by the authorities below of alleged excessive payment made to its director under section 40(A)(2) of the Act. 4.2. CBDT Circular No. 6P dated 06/07/1968, explains the provision of section 40(A)(2) of the Act. The circular explains that, the Ld. AO is expected to exercise his jurisdiction in a reasonable and fair manner and that, the provision is meant to check evasion....
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....h Court while analysing the issue alleged by the revenue, held that revenue was not in a position to point out how assessee evaded payment of tax by the alleged payment of higher commission to its sister concern as the sister concern was also paying tax at a higher rate and copies of the assessment order of sister concern were taken on record by the Tribunal. 4.4. In the present facts of the case, assessee paid to its director salary and commission being percentage of the profits earned. We find that expenditure was claimed by assessee on account of payment of salary and commission to the director which is not in violation of any prevailing provisions of the Act. Further, it is also stated that the director to whom the payment was made b....