DCIT 10(2)(2), MUMBAI V. MICROTROL STERLISATION SERVICES P.LTD, MUMBAI

ITA 3489/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8509 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOURABH RAI LD
• Assessee Lawyers: KESHAV B BHUJLE LD
• Keywords: Salary income; Period of limitation; Fair market value
• Section: 143(3); 37(1)

Judgement Text

ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3281/MUM/2015 ( / ASSESSMENT YEAR: 2011-12) MICROTROL STERILISATION SERVICES PRIVATE LIMITED (CIN : U33120MH1991PTC064185) 1,KIRPLANI ESTATE SAKI VIHAR ROAD SAKI NAKA, ANDHERI(EAST) MUMBAI-400 072 / VS. DEPUTY COMMISSIONE R OF INCOME TAX 8(2) MUMBAI ./ ./PAN/GIR NO. AAACM-2664-B ( /APPELLANT ) : ( !' / RESPONDENT ) & ./I.T.A. NO.3489/MUM/2015 ( / ASSESSMENT YEAR: 2011-12) DEPUTY COMMISSIONER OF INCOME TAX 10(2)(2) ROOM NO. 216A AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020 / VS. MICROTROL STERILISATION SERVICES PRIVATE LIMITED (CIN : U33120MH1991PTC064185) 1,KIRPLANI ESTATE SAKI VIHAR ROAD SAKI NAKA, ANDHERI(EAST) MUMBAI-400 072 ./ ./PAN/GIR NO. AAACM-2664-B ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : KESHAV B BHUJLE, LD. AR REVENUE BY : SOURABH RAI, LD. SR. DR / DATE OF HEARING : 12/10/2017 / DATE OF PRONOUNCEMENT : 08/11/2017 ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS APPEAL BY ASSESSEE AS WELL AS RE VENUE FOR ASSESSMENT YEAR [AY] 2011-12 WHICH CONTEST THE ORDE R OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-17 [CIT(A)], M UMBAI, APPEAL NO.CIT(A)-17/IT/246/13-14 DATED 18/03/2015 . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX- 8(2) [AO] U/S 143(3) ON 30/11/2013. THE REGISTRY HAD NOTED THAT THE APPEAL OF THE REVENUE HAS BEEN FILED WITH A DELAY O F 22 DAYS. HOWEVER, THE REVENUE HAS FILED REVISED FORM 36 RECTIFYING THE DATE OF COMMUNICATION OF THE IMPUGNED ORDER. WE FIND THAT C ALCULATING PERIOD OF LIMITATION AS PER REVISED FORM 36 , THERE IS NO DELAY IN FILING THE APPEAL AND THEREFORE, THE SAME APPEARS TO BE IN ORDER. NO OBJECTION IS RAISED AGAINST THE SAME BY LD. COUNSEL FOR ASSESSEE [AR]. HENCE, FINDING THE APPEAL IN ORDER, WE PROCEED FURTHER TO DECIDE THE S AME ON MERITS. 2.1 THE ASSESSEE, IN ITA NO.3281/MUM/2015 HAS RAISE D THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL ) ERRED IN NOT DELETING THE SERVICE TAX RS.3,11,135/- ON THE COMMISSION, WHICH WAS NOT DEBITED TO THE P &L A/C AND CLAIMED AS SERVICE TAX INPUT CREDIT, IMPLIE DLY CONFIRMING THE ADDITION. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN UPHOLDING THE DECISION OF THE LEARNED AO AS REGARDS THE COMMISSIO N OF RS.80,64,887 PAID TO THE TWO DIRECTORS AND M/S. MERCURIAL CORPORATE PVT. LTD AND IN UPHOLDING THE ADDITION/DISALLOWANCE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) FAILED TO APPRECIATE THAT THE COMMISSION IS PAID ON THE BASIS OF THE SERVICES REN DERED AND NOT AS PER THE SHAREHOLDING WHICH IS A BASIS FOR DISTRIBUTING DIVI DEND. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) FAILED TO APPRECIATE THAT THE COMMISSION OF RS.50,44,56/- PAID TO THE TWO DIRECTO RS IS ALSO PART OF THE REMUNERATION PAID TO THE DIRECTORS AND ACCORDINGLY IS ALLOWABLE AS SUCH. ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 3 2.2 THE REVENUE, IN ITA NO.3489/MUM/2015 HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANC E OF THE EXCESS REMUNERATION PAID TO THE DIRECTORS OF THE COMPANY U NDER SECTION 40A(2) OF THE IT ACT WITHOUT APPRECIATING THE FACT THAT THE A O HAS FORMED OPINION ON THE FACTS THAT PAYMENT OF REMUNERATION TO UNREASONABLE WITH REFERENCE TO THE LINE OF BUSINESS OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE CEILING LIMIT SPECIFIED U NDER SECTION 198 OF THE COMPANIES ACT FOR REMUNERATION TO DIRECTORS IN THE PUBLIC LIMITED COMPANIES CANNOT BE TAKEN AS A BENCHMARK FOR DECIDING UNREASO NABLENESS OF THE REMUNERATION PAID TO THE DIRECTORS OF THE COMPANY U NDER SECTION 40A(2) OF THE IT ACT. THE OTHER GROUNDS RAISED IN REVENUES APPEAL HAVE N OT BEEN PRESSED DURING HEARING BEFORE US AND HENCE, THE SAME ARE DI SMISSED AS BEING NOT PRESSED. 3.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN STERILIZATION BUSINESS WAS ASSESSED FOR IMPUGNED AY ON 30/11/2013 U/S 143(3) AT RS.6,94,71,050/- AS AGAINS T RETURNED INCOME OF RS. 5,37,82,810/- E-FILED BY THE ASSESSEE ON 22/09/2011. THE ASSESSEE HAS SUFFERED ADDITION OF RS.1,24,94,330/- ON ACCOUN T OF SALARY AND COMMISSION PAID TO DIRECTORS/SHAREHOLDERS AND RS.31 ,49,000/- ON ACCOUNT OF COMMISSION PAID TO OUTSIDERS AND THESE A DDITIONS ARE THE SUBJECT MATTER OF THIS APPEAL. 3.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE PAID REMUNERATION AND COMMISSION TO DIRECTORS/SHARE HOLDERS AS PER THE FOLLOWING DETAILS:- SL.NO. NAME OF THE DIRECTOR NAME OF THE SHAREHOLDERS NO OF SHARES HELD REMUNERATION COMMISSION TOTAL 1 BANSIDHAR DHURANDHAR BANSIDHAR DHURANDHAR 20,700 28,80,000 26,84,832 55, 64,832 2 VIKRAM B KALIA VIKRAM B KALIA 33,200 28,80,000 23,59,324 52,39,324 ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 4 3 MOHINI KALIA MOHINI KALIA 21,100 28,80,000 - 28,8 0,000 4 SUREKHA DHURANDHAR SUREKHA DHURANDHAR 34,000 24,48,000 - 24,48,000 5 NISHAD DHURANDHAR NISHAD DHURANDHAR 3,400 3,82,600 - 3,82,600 6 - MERCURIAL CORPORATE PVT LTD 20,000 - 33,31,866 33,31,866 TOTAL 1,11,47,600 83,76,022 1,95,23,622 THE ABOVE PAYMENTS, IN THE OPINION OF LD. AO, WERE COVERED BY THE PROVISIONS OF SECTION 40A(2) READ WITH SECTION 36(1)(II). THE LD. AO ALSO NOTED THAT THE PROVISIONS OF SECTION 198 OF THE COMPANIES ACT, 1956 PUT A CEILING OF 11% OF NET PROFITS ON OVERALL REMUNERA TION THAT COULD BE PAID TO THE DIRECTORS AND MANAGERS. ACCORDINGLY, THE ASS ESSEE WAS ASKED TO JUSTIFY THE SALARY/COMMISSION PAYMENT IN TERMS OF S ECTION 40A(2) AND ALSO ASKED TO PROVIDE THE DETAILS OF SERVICES OBTAI NED AGAINST COMMISSION PAYMENT. THE ASSESSEE POINTED OUT THAT T HE ASSESSEE WAS IN SPECIALIZED LINE OF BUSINESS AND THE DIRECTORS W ERE HANDLING PROMOTIONAL ASPECT OF THE BUSINESS. FURTHER, COMMIS SION WAS PAID TO TWO DIRECTORS BASED ON SALES ACHIEVED BY THE RESPECTIVE BRANCHES BEING CONTROLLED BY THEM. IT WAS ALSO POINTED OUT THAT TH E PROVISIONS OF SECTION 198 OF THE COMPANIES ACT, 1956 WERE APPLICABLE ONLY TO PUBLIC LIMITED COMPANIES AND COULD NOT BE APPLIED TO ASSESSEE SINCE IT WAS PRIVATE LIMITED COMPANY . HOWEVER, NOT CONVINCED, LD. AO DISALLOWED COMMISSION AGGREGATING RS.83,76,022/- PAID TO THREE PARTIES BY APPLYING THE PROVISIONS OF SECTION 36(1)(II), SECTION 37(1) & SECTION 40A(2) SINCE THE IMPUGNED PAYMENTS, IN THE OPINION OF LD. AO, WE RE MADE IN THE GARB OF DIVIDEND AND MOREOVER, THE ASSESSEE COULD NOT SU BSTANTIATE THE WORK DONE BY THE RESPECTIVE PARTIES SO AS TO BE ENTITLED TO GET THE IMPUGNED COMMISSION. ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 5 3.3 SIMILARLY, THE SALARY PAYMENT OF RS.1,11,47,600 /- TO FIVE PERSONS AS ENUMERATED IN THE ABOVE TABLE WAS RESTRICTED TO RS. 70,29,292/-, BEING 11% OF NET PROFITS ACHIEVED BY THE COMPANY IN TERMS OF SECTION 198 OF THE COMPANIES ACT. 3.4 THE AGGREGATE DISALLOWANCE, THUS WORKED OUT BY LD. AO IN THIS MANNER, AMOUNTED TO RS.1,24,94,330/- WHICH COMPRISE D OF COMMISSION DISALLOWANCE OF RS.83,76,022/- AND SALARY DISALLOWA NCE OF RS.41,18,308/-. 3.5 APART FROM ABOVE DISALLOWANCE, THE LD. AO MADE ANOTHER DISALLOWANCE OF RS.31.49 LACS BEING COMMISSION PAID TO VARIOUS OUTSIDER PARTIES SINCE THE ASSESSEE COULD NOT SUBST ANTIATE THE NATURE OF SERVICES BEING RECEIVED BY THE ASSESSEE FROM THE SA ID PARTY. 4.1 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 18/03/20 15 WHERE THE ASSESSEE POINTED OUT THAT IT ACHIEVED SALES OF RS.2 5.66 CRORES AGAINST WHICH IT HAS DEBITED COMMISSION ONLY FOR RS.31,49,3 18/-. THE FIGURES OF RS.83,76,022/- TAKEN BY LD. AO INCLUDED SERVICE TAX OF RS.3,11,135/- WHICH WAS NEVER DEBITED TO THE PROFIT & LOSS ACCOUN T AND THE BALANCE AMOUNT OF RS.80,64,887/- COMPRISED OF COMMISSION OF RS.30,20,731/- PAID TO A SISTER CONCERN NAMELY MERCURIAL CORPORATE SERVICES PRIVATE LIMITED AND BALANCE RS.50,44,156/- AS COMMISSION PAID TO TW O DIRECTORS AS PART OF THEIR REMUNERATION. IT WAS FURTHER POINT ED OUT THAT THE TWO DIRECTORS AND SAID ENTITY HAD COMBINED SHAREHOLDING OF 51.67% AND COMMISSION WAS NOT BASED ON THEIR SHAREHOLDING BUT WAS PAID ON THE BASIS OF SERVICES ACTUALLY RENDERED BY THEM. THE AT TENTION WAS ALSO DRAWN TO THE FACT THAT TOTAL SALARY & COMMISSION PA ID TO THE DIRECTORS WAS ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 6 RS.1,61,32,156/- AND NOT RS.1,11,47,600/- AS WRONGL Y TAKEN BY LD. AO. RELIANCE WAS PLACED ON SEVERAL JUDICIAL PRONOUNCEME NTS AND CBDT CIRCULAR NO.6P DATED 06/07/1968 FOR THE CONTENTION THAT DISALLOWANCE WAS NOT JUSTIFIED IN TERMS OF SECTION 40A(2). 4.2 THE LD. CIT(A) AFTER APPRECIATING THE NATURE OF ASSESSEES BUSINESS CONFIRMED ADDITION OF RS.83,76,022/- ON AC COUNT OF COMMISSION ON THE PREMISES THAT THE ASSESSEE COULD NOT PROVE FACTUM OF RECEIPT OF SERVICES WITH COGENT MATERIAL. HOWEVER, LD. CIT(A) DELETED ADDITION OF RS.41,18,308/- QUA SALARY PAYMENT BY PLACING RELIANCE ON THE CITED CBDT CIRCULAR, VARIOUS JUDICIAL PRONOUNCEMENTS AND UPON NOTICING THAT THE PROVISIONS OF SECTION 198 OF THE COMPANIES ACT, 1956 WERE NOT APPLICABLE TO THE ASSESSEE COMPANY. 4.3 QUA DISALLOWANCE OF RS.31.49 LACS ON ACCOUNT OF COMMISS ION PAID TO OUTSIDERS, THE ASSESSEE POINTED OUT THAT THIS AM OUNT INCLUDED AN AMOUNT OF RS.30,20,731/- WHICH WAS A PART OF THE EA RLIER DISALLOWANCE OF RS.83,76,022/- AND HENCE THERE WAS A DOUBLE DISALLO WANCE. IT WAS FURTHER DEMONSTRATED THAT THE BALANCE COMMISSION WA S PAID TO THREE INDEPENDENT PARTIES AGAINST RECEIPT OF SERVICES AND THEREFORE, NO DISALLOWANCE WAS JUSTIFIED. THE LD. CIT(A) CONCURRE D WITH THE SAME AND DELETED THE ADDITION OF RS.31.49 LACS. 5. AGGRIEVED, THE REVENUE AS WELL AS ASSESSEE IS IN APPEAL BEFORE US. THE ASSESSEE IS AGGRIEVED BY CONFIRMATION OF ADDITI ON TO THE EXTENT OF RS.83,76,022/- WHEREAS REVENUE IS AGGRIEVED BY DELE TION OF ADDITION OF RS.41,18,308/- ON ACCOUNT OF DIRECTORS SALARY PAID BY THE ASSESSEE. 6. THE LD. COUNSEL FOR ASSESSEE [AR] CONTENDED THAT COMMISSION PAID TO THE DIRECTORS WAS PART OF REMUNERATION AND THE SAME WAS BASED ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 7 UPON THE PERFORMANCE OF RESPECTIVE BRANCHES BEING C ONTROLLED BY THEM AND HAD NO CORRELATION WITH THEIR RESPECTIVE SHAREH OLDING AND THEREFORE, DISALLOWANCE WAS NOT JUSTIFIED. THE ATTENTION IS DR AWN TO THE FACT THAT THE PAYMENT OF SALARY AND COMMISSION, IN THIS MANNER, I S REGULAR FEATURE AND IS BEING PAID BY THE ASSESSEE OVER PAST SEVERAL YEA RS AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE. PER CONTRA , LD. DR CONTENDED THAT THE ASSESSEE PAID HEAVY SALARY AND COMMISSION TO DIRECT ORS WITHOUT CORROBORATING THE RECEIPT OF SERVICES WITH BRINGING ON RECORD ANY COGENT MATERIAL / EVIDENCE TO SUBSTANTIATE THE SAME. 7. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. FOR EASE OF CONVENIENCE, WE DEA L WITH THE ISSUE IN TWO PARTS I.E. ALLOWABILITY OF SALARY & COMMISSION TO DIRECTORS AND ALLOWABILITY OF COMMISSION TO SISTER CONCERN . 8. AS EMANATING FROM RECORDS, THE ASSESSEE HAS MADE SALARY & COMMISSION PAYMENT TO DIRECTORS IN THE FOLLOWING MA NNER:- SL.NO. NAME OF THE DIRECTOR / SHAREHOLDER NO OF SHARES HELD % OF SHAREHOLDINGS REMUNERATION COMMISSION TOTAL 1 BANSIDHAR DHURANDHAR 20,700 23.21% 28,80,000 26,8 4,832 55,64,832 2 VIKRAM B KALIA 33,200 23.21% 28,80,000 23,59,324 52,39,324 3 MOHINI KALIA 21,100 14.75% 28,80,000 - 28,80,000 4 SUREKHA DHURANDHAR 34,000 23.77% 24,48,000 - 24,4 8,000 5 NISHAD DHURANDHAR 3,400 2.37% 3,82,600 - 3,82,600 TOTAL 1,14,70,600/- 50,44,156/- 1,65,14,756/- AS EVIDENT FROM ANNUAL REPORT OF THE COMPANY PLACED ON PAGE NO. 18 OF THE PAPER BOOK, THE COMPANY HAS ONLY FOUR DIRECTORS AND NISHAD DHURANDHAR IS NOT THE DIRECTOR OF THE COMPANY. SECONDLY, IT IS NOTED THAT COMMISSION HAS BEEN PAID ONLY TO TWO DIRECTORS AND THE SAME IS NOT IN PROPORTION TO THEIR SHAREHOLDINGS AS EVIDENT FROM P ERUSAL OF ABOVE TABLE. ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 8 FURTHER, THE DIRECTORS, IN THEIR RESPECTIVE RETURN OF INCOME, AS EVIDENT FROM PLACED ON PAGE NOS. 74 TO 77 OF THE PAPER BOOK, HAVE REFLECTED THE AGGREGATE PAYMENT AS ABOVE UNDER THE HEAD SALARY INCOME AND ALL THE DIRECTORS FALL IN THE HIGHEST TAX BRACKET . THE ASSESSEE IS MAKING THE SALARY AND COMMISSION PAYMENT, IN SIMILAR MANNER, T O THE DIRECTORS SINCE AY 2004-05 , THE DETAILS OF WHICH ARE AVAILABLE ON PAGE-73 OF TH E PAPER BOOK. 9. ON THE BASIS OF ABOVE FACTS, WE FIND THAT THE PR OVISIONS OF SECTION 36(1)(II) HAS NO APPLICABILITY SINCE THE COMMISSION PAYMENT ARE NOT IN PROPORTION TO THE RESPECTIVE SHAREHOLDINGS AND MORE OVER, THE COMMISSION HAS BEEN PAID ONLY TO TWO DIRECTORS OUT OF FOUR DIRECTORS. THE ASSESSEE HAS ASSERTED THAT THE COMMISSION HAS BEEN PAID IN PROPORTION TO THE PERFORMANCE ACHIEVED BY RESPECTIVE BRANCHES BEING CONTROLLED BY THEM AND THIS FACT IS NOWHERE CONTROVERTED BY THE R EVENUE. UNDISPUTEDLY, THE PROVISIONS OF SECTION 198 OF THE COMPANIES ACT, 1956 COULD NOT BE APPLIED TO ASSESSEE SINCE THE SAME WAS APPLICABLE ONLY TO PUBLIC COMPANIES AND NOT TO PRIVATE COMPANIES . LASTLY, IN TERMS OF PROVISIONS OF SECTION 40A(2)(A), THE DISALLOWANCE C OULD BE MADE ONLY IF THE ASSESSING OFFICER WAS OF OPINION THAT SUCH EXPE NDITURE WAS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF GOODS, SERVICES OR FACILITIES FOR WHICH THE PAYMENT IS MADE OR THE LEGITIMATE NEEDS OF THE BUSINESS OR PROFESSION OF T HE ASSESSEE OR THE BENEFIT DERIVED BY OR ACCRUING TO HIM THEREFROM . HOWEVER, THE REVENUE IS UNABLE TO POINT OUT AS TO HOW THE PAYMENT WERE EXCE SSIVE OR UNREASONABLE HAVING REGARD TO FAIR MARKET VALUE OF SUCH SERVICES. ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 9 10. FINALLY, AT THIS JUNCTURE, WE ARE INCLINED TO R EPRODUCE THE OBSERVATION MADE BY JURISDICTIONAL HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. V.S.DEMPO & CO. (P.) LTD. (336 ITR 209) :- IN THIS CONNECTION, THE FACT THAT THE ASSESSEE AS WELL AS ITS SUBSIDIARY WHICH IS THE SELLER ARE IN THE SAME TAX BRACKET AND PAY SAME RAT E OF TAX IS A FACT WHICH ASSUMES IMPORTANCE. ADMITTEDLY, IT IS NOT A CASE OF TAX EVA SION INASMUCH AS IF THE RATE WOULD HAVE BEEN LESS, THE ASSESSEES PROFIT WOULD HAVE BE EN MORE, BUT THE PROFITS OF THE SELLER WOULD HAVE BEEN LESS AND BOTH BEING TAXABLE AT THE SAME RATE, THERE WOULD BE NO DIFFERENCE IN THE AGGREGATE TAX PAYABLE BY THE A SSESSEE AND ITS SUBSIDIARY. RESPECTFULLY FOLLOWING THE SAME AND ON THE BASIS OF OUR ABOVE OBSERVATIONS AND CONCLUSIONS, WE DELETE THE IMPUGNE D ADDITIONS SO FAR AS IT RELATES TO SALARY AND COMMISSION PAYMENT TO D IRECTORS. IN OTHER WORDS, THE STAND OF LD. CIT(A) IN DELETING THE ADDI TION OF RS.41,18,308/- IS CONFIRMED AND DISALLOWANCE OF RS.50,44,156/- OUT OF TOTAL ADDITION OF RS.83,76,022/- AS CONFIRMED BY LD. CIT(A) STANDS DE LETED. 11. NOW, WE ADVERT OUR ATTENTION TO ADDITION MADE O N ACCOUNT OF COMMISSION PAID TO SISTER CONCERN NAMELY MERCURIAL CORPORATE SERVICES PRIVATE LIMITED FOR RS.33,31,866/-. WE FIND THAT THE SAID PAYMENT CONSIST OF COMMISSION OF RS.30,20,731/- & SERVICE TAX THERE UPON @10.3% AMOUNTING TO RS.3,11,135/-. THE AMOUNT OF RS.30,20, 731/- IS INCLUDED IN AGGREGATE COMMISSION AMOUNT OF RS.31,49,318/- DEBITED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT. THE SERVICE TAX AMOUNT OF RS.3,11,135/- HAS, PRIMA FACIE, NOT BEEN DEBITED UNDER COMMISSION. FURTHER, UPON PERUSAL OF THE PAPER BOOK, WE FIND THAT THE ASSESSEE HAS PAID THE SAID COMMISSION @5% OF NET SALES ACHIEVED BY BANGALORE GAMMA FACILITY PURSUANT TO AGREEMENT DATED 09/04/2007, WHICH IS EFFECTIVE FOR A PERIOD OF FIVE YEARS STARTING FROM 01/04/2007. APPARENTLY, ITA.NO.3281 & 3489/MUM/2015 MICROTROL STERILISATION SERVICES PRIVATE LIMITED ASSESSMENT YEAR-2011-2012 10 THE COMMISSION IS BEING PAID BY THE ASSESSEE OVER P AST SEVERAL YEARS AND WHICH IS ALSO EVIDENT FROM THE FACT THAT THE AS SESSEE HAS DEBITED SIMILAR COMMISSION OF RS.22,45,962/- IN IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE ASSESSEE, IN THE PAPER BOOK, H AS PLACED COMPLETE DETAILS OF COMMISSION PAYMENT VIZ. AGREEMENT, MONTH-WISE CALCULATIONS, LEDGER EXTRACTS, RESPECTIVE INVOICES & DETAILED CALCULATIONS OF THE AMOUNT OF COMMISSION ON PAGE NUMBERS 78 TO 1 25 , WHICH ESTABLISHES THE CLAIM OF THE ASSESSEE. THEREFORE, W E ARE OF THE OPINION THAT THE IMPUGNED ADDITION QUA COMMISSION IS NOT WARRANTED FOR AND THEREFORE, WE DELETE THE SAME. 12. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOW ED WHEREAS THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT CONCERNED 5. !$, , , , / DR, ITAT, MUMBAI 6. -. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI