IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH A NEW DELHI BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER, AND SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 6645/DEL/2016 (ASSESSMENT YEAR 2011-12) ACIT, SPL. RANGE-1, NEW DELHI (APPELLANT) VS M/S. A B PAL ELECTRICAL PVT. LTD., 1826, BHAGIRATH PLACE, CHANDNI CHOWK, DELHI-06 (PAN : AABCA 1608 G) (RESPONDENT) CO NO. 29/DEL/2017 (ARISING OUT OF ITA NO. 6645/DEL/2016) ( ASSESSMENT YEAR 2011-12 ) M/S. A B PAL ELECTRICAL PVT. LTD., 1826, BHAGIRATH PLACE, CHANDNI CHOWK, DELHI-06 (PAN : AABCA 1608 G) (APPELLANT) VS ACIT, SPL. RANGE-1, NEW DELHI (RESPONDENT) ASSESSEE BY : SH. RAJKUMAR, C.A. SH. SUMIT GOEL, C.A. REVENUE BY : SH. SANJEEV GOEL, CIT - D.R. DATE OF HEARING : 04 .0 3 .2020 DATE OF PRONOUNCEMENT : 11 .0 3 .2020 2 ORDER PER N. K. BILLAIYA, AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARE PREFERRED AGAINST THE ORDER OF THE CIT(A) - 1, NEW DELHI DATED 10.10.2016 PERTAINING TO A.Y 2011-12. 2. SUBSTANTIVE GRIEVANCES OF THE REVENUE READ AS UN DER: 1. LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING AD DITION OF RS.10,52,65,260/- MADE ON ACCOUNT OF SUPPRESSION OF GP MADE BY AO AFTER INVOKING PROVISIONS OF SECTION 145(3) O F INCOME TAX ACT. 2. LD CIT(A) ERRED IN LAW AND ON FACTS IN DELETING DIS ALLOWANCE OF RS.73,18,516/- ON ACCOUNT OF PAYMENT OF COMMISSION TO SHAREHOLDERS EMPLOYEES U/S 36(1)(VA) OF IT ACT, 196 1. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS INTO THE BUSINESS OF RESELLING OF ELECTRICAL GOODS. RET URN OF INCOME FOR THE 3 YEAR UNDER CONSIDERATION WAS E-FILED ON 29.09.2011 DECLARING INCOME OF RS. 50,01,881/-. RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY, STATUTORY NOTICES WERE ISSUED AND SERV ED UPON THE ASSESSEE. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO CONFIRM THE PURCHASES/CREDITORS. THE ASSESSING OFFICER ALSO IS SUED NOTICES U/S 133(6) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REF ERRED TO AS 'THE ACT'] IN THE CASES OF 64 PARTIES ON TEST CHECK BASI S. 5. THE ASSESSEE FURNISHED CONFIRMATIONS. HOWEVER, T HE ASSESSING OFFICER NOTICED THAT ALONGWITH THE CONFIRMATIONS, T HE ASSESSEE DID NOT SUBMIT DETAILS/LEDGERS OF PURCHASE TRANSACTIONS MAD E DURING F.Y. 2010- 11. THE ASSESSING OFFICER OBSERVED THAT THE ASSESS EE HAS FURNISHED COPY OF LEDGER ACCOUNT FOR F.Y. 2011-12. THE ASSES SING OFFICER ALSO DEPUTED AN INCOME-TAX INSPECTOR FOR MAKING SPOT ENQ UIRIES. ACCORDING TO THE ASSESSING OFFICER, NONE OF THE PARTIES WERE FOUND EXISTING/TRACEABLE AT THE ADDRESS SPECIFIED IN THE CONFIRMATIONS FILED BY THE ASSESSEE. 4 6. ACCORDING TO THE ASSESSING OFFICER, ENQUIRIES OF THE INSPECTOR, COUPLED WITH THE POSTAL ENQUIRIES, CAST SERIOUS DOU BT UPON THE VERY AUTHENTICITY AND GENUINENESS OF THESE CONFIRMATIONS AND THEREBY THE VERY TRANSACTIONS OF PURCHASES, RECORDED IN THE BOO KS AGAINST THESE PARTIES WERE UNDER SERIOUS DOUBT. THE ASSESSING O FFICER FURTHER FOUND ACCOUNTING DIFFERENCES OF AROUND 10.47 LAKHS WITH M /S GLOSTER CABLES LTD. FOR LAST SIX YEARS. 7. AFTER POINTING OUT NUMEROUS DEFECTS AND INCONSIS TENCIES, THE ASSESSING OFFICER FORMED A BELIEF THAT THE PURCHASE S DEBITED IN THE TRADING ACCOUNT ARE NOT VERIFIABLE/GENUINE AND ACCO UNTING POLICIES WITH RESPECT TO DISCOUNTS AND SELLING PRICE ARE NOT RELIABLE AND SUFFERS FROM DEFECTS. THE ASSESSING OFFICER FURTHER OBSERV ED THAT THE ACCOUNTS WITH THE PARTIES ARE ALSO NOT CORRECTLY MAINTAINED/ RECONCILED SHOWING THEREBY ABSURD FIGURES. 8. IN THE LIGHT OF THESE FACTS, THE ASSESSING OFFIC ER REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND PROCEEDE D TO ESTIMATE PROFIT. THE ASSESSING OFFICER OBSERVED THAT THE GR OSS PROFIT OF 3.39% SHOWN BY THE ASSESSEE IS VERY LOW AND ESTIMATED THE SAME AT 10.5% AND MADE ADDITION OF RS. 10,52,65,260/-. 5 9. THE ASSESSEE STRONGLY AGITATED THE ADDITION BEFO RE THE LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THA T THE ASSESSING OFFICER HAS PROCEEDED ON WRONG ASSUMPTION OF FACTS AND THERE IS NO DISCREPANCY AND NO BOGUS PURCHASES/UNVERIFIABLE PUR CHASES. IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE AS SESSEE HAS MAINTAINED COMPLETE DAY-TO-DAY STOCK REGISTER, WHIC H WAS EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF SCRUT INY ASSESSMENT PROCEEDINGS. 10. A COMPLETE G.P. CHART WAS GIVEN AND IT WAS BROU GHT TO THE NOTICE OF THE LD. CIT(A) THAT BOOK RESULTS HAVE BEEN ACCEP TED IN EARLIER YEARS AND IN SUBSEQUENT YEARS AND NO ADDITION HAS BEEN MA DE ON ACCOUNT OF G.P. 11. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, TH E LD. CIT(A) OBSERVED THAT IN ASSESSMENT YEAR 2010-11, G.P. DECL ARED BY THE ASSESSEE AND ACCEPTED BY THE REVENUE WAS @ 3.08%. THE LD. CIT(A) WAS OF THE OPINION THAT THOUGH THE ASSESSING OFFICE R HAS REJECTED THE BOOKS OF ACCOUNT, BUT HAS NOT GIVEN ANY COGENT REAS ON FOR ESTIMATING THE PROFIT AT 10.50%. HE, ACCORDINGLY, DELETED THE ENTIRE ADDITION OF RS. 10,52,65,260/-. 6 12. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE FI NDINGS OF THE ASSESSING OFFICER AND VEHEMENTLY STATED THAT THE LD . CIT(A), WHILE DELETING THE ADDITIONS, COMPLETELY IGNORED THE FACT THAT THE LEDGER ACCOUNT FOR F.Y. 2010-11 WAS NOT SUBMITTED BY THE A SSESSEE. IT IS THE SAY OF THE LD. DR THAT THE FINDINGS OF THE LD. CIT( A) ARE COMPLETELY ERRONEOUS ON FACTS. THE LD. DR FURTHER STATED THAT THE ASSESSEE HAS NOT FURNISHED ANY QUANTITATIVE DETAILS OF TRADING ACCOU NT AND THEREFORE, ON THE FINDING OF THE LD. CIT(A) THAT SALES HAVE BEEN ACCEPTED BY DOUBTING THE PURCHASES, ADDITIONS CANNOT BE SUSTAINED. 13. THE LD. DR FURTHER STATED THAT MERELY BECAUSE T HE G.P RATE IN EARLIER YEAR WAS ACCEPTED BY THE DEPARTMENT, CANNOT BE A REASON FOR DELETING THE ADDITIONS, MORE SO, WHEN IN EARLIER YE ARS, THERE WERE NO ADVERSE REMARKS IN RELATION TO PURCHASES. THE LD. DR CONCLUDED BY SAYING THAT RES JUDICATA IS NOT APPLICABLE IN INCOM E TAX PROCEEDINGS. 14. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE RE ITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. IT IS TH E SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT NONE OF THE PURCHASES ARE UNVERIFIABLE AND THERE IS NO DISCREPANCY IN THE BALANCES OF M/S GLOSTER CABLES LTD. THE LD. COUNSEL FOR THE ASSESSEE ONCE AGAIN STATED THAT EVEN IF THE 7 BOOKS OF ACCOUNT WERE REJECTED BY THE ASSESSING OFF ICER, HE CANNOT ESTIMATE THE G.P, DE HORS G.P ACCEPTED IN THE EARLI ER YEARS AND IN SUBSEQUENT YEARS. 15. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE ULTIMATE ADDITION MADE BY THE ASSESSING OFFICER IS ON ACCOUNT OF ALLE GED LOW G.P. IT IS TRUE THAT IN DOING SO, THE ASSESSING OFFICER TRIED TO POINT OUT THE ALLEGED DISCREPANCIES IN THE BOOKS OF ACCOUNT OF TH E ASSESSEE AND PURCHASES. AFTER CAREFULLY PERUSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ALLEGED THE FOLLOWING THREE D ISCREPANCIES: RS.8,12,76,792/ - AS FOR UN - VERIFIABLE PURCHASES VIDE PARA 3 OF ASSTT. ORDER. RS.10,47,804/ - ON ACCOUNT OF DIFFERENCE IN THE CL. BAL OF 2 PARTIES AS PER BOOKS OF ASSESSEE VIS-A-VS BOOKS OF SAID PARTIES VIDE PARA 4 OF ASSTT. ODER. RS.73,98,994/ - TO PROTECT THE LEAKAGE OF REVENUE BY ASSUMING THAT SALES DISCOUNT TO THE EXTENT OF 0.5% HAS BEEN ALLOWED EXCESSIVELY/ LOWERING SELLING PRICE, THEREBY CALCULATING 0.5% ON TOTAL TURNOVER OF RS.147.98 CRORES VIDE PARA 5 OF THE ASSTT. ORDER. RS.8,97,23,590 / - 8 16. A PERUSAL OF THE DETAILED SUMMARY FILED BY THE ASSESSEE SHOWS THAT THE ASSESSING OFFICER HAS ADDED IN SOME CASES OPENING BALANCE AND CASH PAYMENTS MADE DURING THE YEAR AND IN SOME CASES OPENING BALANCES HAVE BEEN TREATED AS PURCHASES. IN OUR CO NSIDERED OPINION, OPENING BALANCES RELATE TO THE PURCHASES MADE IN EA RLIER YEARS WHICH HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER WHILE F RAMING ASSESSMENT FOR EARLIER ASSESSMENT YEARS. 17. FROM THE DETAILS, WE FIND THAT THE PAYMENTS FOR ALL THE PURCHASES HAVE BEEN MADE THROUGH BANKING CHANNEL IN SUBSEQUEN T ASSESSMENT YEAR I.E. 2012-13. FURTHER, WE FIND THAT TOTAL TUR NOVER OF THE ASSESSEE DURING THE YEARS IS RS. 147.98 CRORES AND PURCHASES RELATING TO 16 PARTIES MARKED BY THE ASSESSING OFFICER ARE ONLY RS . 2.24 CRORES WHICH CONSTITUTE ONLY 1.51% OF TOTAL TURNOVER. 18. IN SO FAR AS THE REPORT OF THE INSPECTOR THAT P ARTIES WERE NOT FOUND AT THE GIVEN ADDRESS IS CONCERNED, THE FACTS ON RECORD SHOW THAT THE PURCHASES WERE MADE IN F.Y. 2010-11 AND ASSESSM ENT PROCEEDINGS COMPLETED IN F.Y. 2013-14 AND PAYMENTS HAVE BEEN MA DE IN F.Y. 2011- 12. THEREFORE, WE FIND NO REASON FOR THE ASSESSEE TO KEEP A TRACK OF WHEREABOUTS OF ITS SUPPLIERS. 9 19. IN SO FAR AS THE DIFFERENCES IN BALANCES OF M/S GLOSTER CABLES LTD IS CONCERNED, AS PER THE DETAILS, DIFFERENCES ARE O NLY IN THE OPENING BALANCES WHICH ARE DUE TO THE PENDING RECONCILIATIO N OF OPENING BALANCES AND IT IS NOT THE CASE OF THE ASSESSING OF FICER THAT THERE IS A CESSATION OF LIABILITY. AS MENTIONED ELSEWHERE, TH E ASSESSING OFFICER HAS FINALLY MADE ADDITIONS ON ACCOUNT OF ALLEGED LO W G.P. IN OUR CONSIDERED OPINION, EVEN WHEN THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED BY THE ASSESSING OFFICER, ESTIMATION OF PR OFIT SHOULD BE AS PER THE MATERIAL AVAILABLE ON RECORD. COMPARATIVE SALE S AND G.P DETAILS OF PREVIOUS ASSESSMENT YEARS VIS A VIS ASSESSMENT YEAR UNDER CONSIDERATION IS AS UNDER: A.Y. SALES (IN CRORES) G.P. (DECLARED) (%) G.P. (ASSESSED) (%) 08 - 09 101.29 3.08 3.08 09 - 10 109.70 2.97 2.97 10 - 11 146.46 3.08 3.08 11 - 12 147.98 3.39 10.50 20. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE TH AT IN ALL THE EARLIER ASSESSMENT YEARS, ASSESSMENTS HAVE BEEN FRA MED U/S 143(3) OF THE ACT. THE G.P OF THE ASSESSEE RANGES FROM 2.97% TO 3.08%. WE DO 10 NOT FIND ANY REASON FOR ADOPTION OF G.P. RATE OF 10 .50%. CONSIDERING THE FACTS OF THE CASE IN HAND AS DISCUSSED HEREINAB OVE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. C IT(A). GROUND NO. 1 IS, ACCORDINGLY, DISMISSED. 21. GROUND NO. 2 RELATES TO THE DELETION OF DISALLO WANCE OF RS. 73,18,516/- ON ACCOUNT OF PAYMENT OF COMMISSION TO SHAREHOLDERS EMPLOYEES U/S 36(1)(II) OF THE ACT. 22. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAI D COMMISSION TO THE DIRECTORS AND RELATIVES WHO ARE ALSO SHARE HOLDERS OF THE ASSESSEE COMPANY. PAYMENT DETAILS ERE AS UNDER: NAME OF DIRECTORS POSITION AMOUNT OF SALARY AMOUNT OF COMMISSION EXTENT OF SHAREHO LDING SHRI THAKER PAL SINGH MANAGING DIRECTOR+MAJOR SHAREHOLDERS RS.2,40,000/ - RS.7,31,852/ - 26.82% SHRI DAVINDER PAL SINGH DIRECTOR+MAJOR SHAREHOLDERS RS.2,40,000/ - RS.7,31,852/ 26.82% SHRI GURMEET SINGH DIRECTOR+MAJOR SHAREHOLDERS RS.2,40,000/ - RS.7,31,852/ 21.26% SHRI RASVINDER KAUR DIRECTOR+MAJOR SHAREHOLDERS RS.1,92,000/ RS.7,31,852/ 12.65% 11 SHRI GURJEET SINGH SHAREHOLDERS RS.1,92,000/ RS.7,31,851/ - 5.77% SHRI JASMEET SINGH SHAREHOLDERS RS.1,92,000/ RS.7,31,851/ - 6.28% MRS. JYOTSNA SINGH SHAREHOLDERS RS.1,92,000/ RS.7,31,852/ - 0.1% MRS. BALJEET KAUR SHAREHOLDERS RS.1,92,000/ RS.7,31,852/ - 0.1% SHRI SIMARPREET SINGH SHAREHOLDERS RS.1,92,000/ RS.7,31,851/ 0.1% SHRI MANMEET SINGH SHAREHOLDERS RS.1,92,000/ - RS.7,31,851/ 0.06% SHRI IQBAL SINGH - - - - RS.73,18,516/ - 100% 23. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE COMMISSION PAID TO DIRECTORS SHOULD NOT BE DISALLOWED IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 36(1)(II) OF THE ACT. IT WAS EXPLAINED THAT REMUNERATION OF THE DIRECTORS HAS BEEN FIXED IN THE FORM OF MONTHLY SALARY PLUS ANNUAL COMMISSION AND COMMISSION HAS BE EN PAID IN TERMS OF RESOLUTION PASSED BY THE SHARE HOLDERS IN THE ME ETING HELD. 24. IT WAS FURTHER EXPLAINED THAT ON SIMILAR FACTS IN ASSESSMENT YEAR 2009-10 ALSO, SIMILAR COMMISSION WAS PAID. THE ASS ESSING OFFICER WAS OF THE OPINION THAT THE COMMISSION PAID TO THE DIRE CTORS WOULD HAVE 12 BEEN OTHERWISE PAYABLE IN THE FORM OF DIVIDEND AND TO AVOID DIVIDEND DISTRIBUTION TAX, COMMISSION HAS BEEN PAID TO THE D IRECTORS. THE ASSESSING OFFICER, THEREFORE, MADE ADDITION OF RS. 73,18,516/- 25. THE ASSESSEE AGITATED THE ADDITION BEFORE THE L D. CIT(A). IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT SIMILA R DISALLOWANCE WAS ALSO MADE IN ASSESSMENT YEAR 2010-11 AND THE SAME W AS DELETED BY THE LD. CIT(A) AND SIMILAR CLAIMS WERE ALSO ALLOWED IN EARLIER YEARS STARTING FROM ASSESSMENT YEAR 2007-08 ONWARDS. 26. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, TH E LD. CIT(A) HELD AS UNDER: I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER. IT IS SEEN THAT APPELLANT HAS PAID COMMISSION TO TH E SHAREHOLDERS CUM DIRECTORS DURING THE YEAR @ .075% TO THE FOUR DIRECTORS AND 0.050% TO THE SHAREHOLDERS. THE TOTAL COMMISSION PAYMENT COMES TO 0.5% OF THE SALES TURNO VER. THE APPELLANT SUBMITTED BEFORE ME THAT IT HAS MADE COMM ISSION PAYMENT TO DIRECTORS AS WELL AS SHAREHOLDERS FROM A .Y. 2007-08 ONWARDS AND THE SAME HAS BEEN ALLOWED WITHOUT ANY D ISALLOWANCE EXCEPT IN THE A.Y. 2010-11. IN THE A.Y. 2010-11, TH E COMMISSION 13 WAS ALLOWED ON THE SAME RATE TO THE DIRECTORS CUM S HAREHOLDERS WHICH WAS DISALLOWED BY THE AO IN THE ASSESSMENT OR DER, HOWEVER, THE SAID DISALLOWANCE HAS BEEN DELETED BY THE CIT(A) VIDE ITS APPEAL NO..31/13-14 DATED 03.04.2014 WITH FOLLOWING OBSERVATIONS: 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE ORDER PASSED BY THE AO. IN FIND THAT THE COMMISSION TO THE DIRECTOR HAS BEEN P AID @ 0.075% OF THE TOTAL SALE W.E.F. 1.4.2006 IN PURSUAN CE OF RESOLUTION PASSED BY THE BOARD OF DIRECTORS ON 18.1.2006. I ALSO FIND THAT THE AO HAS ALLOWED THE SIMILAR COMMISSION IN THE A.Y. 2007-08, 2008-09 & 2009-10 @ 0.075% OF THE TOTAL SALES. THE ASSESSMENT ORDER PASSED U/S 143(3).. DCIT (SUPRA) HAS HELD THAT WHERE THE DIRECTORS ARE THE EMPLOYEES OF THE COMPAN Y AND RECEIVE COMMISSION FOR SERVICES RENDERED TO THE COMPANY AS PER THE RESOLUTION PASSED BY THE BOARD, THE COMMISSION PAID TO THE DIRECTORS WAS PART OF THE SALARY AND CANNOT BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE U/S 36(1)(II) OF THE ACT. THE HONBLE H IGH COURT HAS REITERATED THE ABOVE VIEW IN THE CASE OF CIT VS CARRIER LAUNCHER INDIA LTD. 250 CTR 240. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL PRONOUNCEMENT OF THE JURISDICTIONAL HIGH COURT, THE DISALLOWANCE MADE BY THE AO CANNOT BE SUSTAINED AND HENCE THE SAME IS DIRECTED TO BE DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 14 SINCE, THE FACTS OF THIS YEAR ARE IDENTICAL WITH TH E FACTS OF THE A.Y. 2010-11 AND COMMISSION HAS BEEN ALLOWED TO THE DIRECTORS CUM SHAREHOLDERS DURING THE YEAR AS WAS D ONE IN A.Y. 2010-11, THEREFORE, THE DECISION OF A.Y. 2010-11 OF CIT(A)-IV IS SQUARELY APPLICABLE TO THE A.Y. 2011-12. HENCE, THE DISALLOWANCE OF COMMISSION PAYMENT TO DIRECTORS CUM SHAREHOLDERS IS DELETED. IN THE RESULT, THIS GROUND OF APPEAL IS ALLOWED. 27. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE FI NDINGS OF THE ASSESSING OFFICER. IT IS THE SAY OF THE LD. DR THA T PAYMENT OF COMMISSION TO THE DIRECTORS WAS MADE WITHOUT ANY DO CUMENTARY EVIDENCES OF BOARDS RESOLUTION TO MAKE SUCH PAYMEN TS. THE LD. DR STRONGLY STATED THAT TO AVOID DIVIDEND DISTRIBUTION TAX, THE ASSESSEE HAS CONVENIENTLY PASSED ON THE PROFIT OF THE COMPAN Y THROUGH COMMISSIONS TO THE DIRECTORS. STRONG RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE MUMBAI HIGH COURT IN THE CA SE OF MOTOR SERVICE COMPANY LIMITED 14 ITR 647 AND ALSO ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DALAI BROACHA STOCK BROKING PVT LTD 10 ITR 0357 [TRIB]. 15 28. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE RE ITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES AND ONCE A GAIN STATED THAT SIMILAR DISALLOWANCE WAS MADE IN ASSESSMENT YEAR 20 10-11 WHICH WAS DELETED AND ALSO FURNISHED COPY OF THE ORDER OF THE FIRST APPELLATE AUTHORITY FOR ASSESSMENT YEAR 2010-11. 29. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE RE IS NO ALLEGATION THAT THESE PERSONS ARE NOT WORKING FOR THE COMPANY. IN OUR CONSIDERED OPINION, IT IS THE PREROGATIVE OF THE ASSESSEE TO D ECIDE THE REMUNERATION ETC TO BE PAID TO THE PERSONS WHO WORK FOR HIS COMPANY. AS PER THE AGREEMENT, SIX DIRECTORS, WHO WERE ALSO SHARE HOLDERS, WERE PAID ADDITIONAL SALARY TERMED AS COMMISSION AND T HERE ARE FOUR EMPLOYEES WHO ARE ALSO SHARE HOLDERS WHO ALSO HAVE BEEN PAID SALARY WITH ADDITIONAL SALARY TERMED AS COMMISSION. THE TOTAL COMMISSION COMES TO 0.5% OF THE TOTAL TURNOVER. IN OUR HUMBLE OPINION, CONSIDERING THE NATURE OF THE BUSINESS OF THE ASSES SEE VIS A VIS THE TURNOVER, SUCH PAYMENT OF COMMISSION CANNOT BE DOUB TED. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THUS, GROUND NO. 2 ALSO STANDS DISMISS ED. 16 30. GROUND NO. 1 OF THE CROSS OBJECTIONS FILED BY T HE ASSESSEE WAS NOT PRESSED. ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 31. GROUND NOS. 2 AND 3 OF THE CROSS OBJECTIONS ARE IN SUPPORT OF THE FINDINGS OF THE LD. CIT(A) AND NEED NO SEPARATE ADJ UDICATION. ACCORDINGLY, THE CROSS OBJECTIONS TOO, STAND DISMIS SED. 32. TO SUM UP, IN THE RESULT, THE APPEAL OF THE REV ENUE IN ITA NO.6645/DEL/2016 AS WELL AS THE CROSS OBJECTIONS IN CO NO. 59/DEL/2017 OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2020 . SD/- SD/- (H.S. SIDHU) (N. K. BIL LAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11/03/2020 VL/ 17 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE THE AUTHOR 3. DRAFT PLACED BEFORE THE OTHER MEMBER 4. APPROVED DRAFT COMES TO THE SR.PS/PS 5. ORDER UPLOADED ON 6. FILE SENT TO THE BENCH CLERK 7. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE OF DISPATCH OF ORDER.