2023 (9) TMI 600

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....2. The assessee has raised the following grounds of appeal:- "1. The learned CIT (A) has erred in confirming the disallowance of Rs 32,74,998 working Directors commission on profits, despite it being permitted by the Companies Act and held as allowable by appellate authorities in other years on the basis decisions by the jurisdictional High Court 2 The learned CIT (A) has erred in not dealing / giving directions in his order for correct determination of tax due after granting Proper credits for prepaid taxes and for adjusting refunds which were purported to be given but not actually given 3 That the above grounds are independent and without prejudice to each other." 3. The only issue to be decided in this appea....

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....f the assessee company at the relevant point of time are as under:- i. Mr. Feroz :5% ii. Mohit : 95% 6. We find at page 17 of the paper book containing extract of the minutes of annual general meeting of the assessee company held on 27.09.2008, wherein, while adopting the annual accounts of the assessee company for the year ended on 31.03.2008, the shareholders of the assessee company had approved the following remuneration to Mr. Feroz:- i. Salary Rs. 40,000/- per month ii. Commission on profit 7.5% 7. We find that the ld CIT(A) had wrongly held in his order that both Mr. Feroz and Mr. Sumit are holding 50% of shareholding each in the assessee company. This is factually incorrect as is evident from....

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.... been payable to him as profits or dividend if it had not been paid as bonus or commission. In other words, if the said commission payment is not made, then the very same sum would be available for distribution to him as profits or dividend. In the instant case, as stated earlier, Mr. Feroz is only holding 5% shares in the assessee company and remaining 95% held by Mr. Mohit. Hence, the decision to declare dividend should be taken with the consent of Mr. Mohit and it is not left to the prerogative of the assessee alone who happens to be minority share holder in the assessee company. Hence, in the facts and circumstances of the instant case, the payment of commission to the Director could not have been paid to him as profit or dividend. Henc....