ACIT, New Delhi V. M/s. Clients Forgings (P) Ltd, Faridabad

ITA 3927/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2218 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 18-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI D.R.SINGH AND SHRI K.D.RANJAN ITA NO.3927/DEL/2009 ASSESSMENT YEAR : 2005-06 ACIT CIRCLE-3(1) NEW DELHI. VS CLIENTS FORGINGS (P) LTD. 13/3/, MATHURA ROAD, FARIDABAD. PAN AAACC 1335K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH GUPTA, D.R. RESPONDENT BY : SHRI K.V.S.GUPTA, C.A. ORDER PER RANJAN, AM: THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2005 06 ARISES OUT OF LD. CIT(A)-VI, NEW DELHI. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.535501/- AND RS.1101189/- MADE BY THE A.O. ON ACCOUNT OF BON US AND COMMISSION PAID TO DIRECTORS OF THE COMPANY EVEN TH OUGH IT WAS NOT ALLOWABLE EXPENDITURE WITHIN THE MEANING OF SECTION 36(1)(II) OF THE INCOME-TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FORGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE DURING THE HEARING OF THIS APPEAL. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.5,35,501/- AND RS.11,01,189/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT 2 OF BONUS AND COMMISSION PAID TO DIRECTORS OF THE CO MPANY. AT THE OUTSET, IT WAS POINTED OUT BY THE LD. A.R. OF THE ASSESSEE THA T THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF I.T.A.T. FOR ASSESSMENT YEAR 2004-05 DATED 27/2/2009. IT HAS ALSO BEEN SUBMITTED THAT LD . CIT(A) HAS DELETED THE ADDITION RELYING ON DECISION OF I.T.A.T. IN ASSESS EES OWN CASE. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. I.T.A.T. DELHI BENCH B NEW D ELHI IN ITA NO.5022/DEL/2007 FOR ASSESSMENT YEAR 2004-05 IN ASS ESSEES OWN CASE HAS DELETED THE ADDITION BY OBSERVING AS UNDER: 4. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THERE IS NO DISPUTE THAT IN THE PRECEDING YEARS AND ALSO IN THE SUBSEQUENT YEARS OF THE ASSESSMENT YEAR UNDER APPEAL THE DEPARTMENT HAS ACCEPTED THE COMMISSION PAID BY THE ASSESSEE COMPANY TO ITS DIRE CTOR. WE ALSO FIND THAT THE BONUS WAS PAID @8.33% TO THE DIRECTOR OF T HE ASSESSEE COMPANY. WE ALSO FIND THAT DIRECTOR SRI D.K.OHRI WA S PAID SALARY TO THE EXTENT OF RS.60 LACS AND THE BONUS WAS PAID @8. 33% I.E. RS.5 LACS, WHICH IS NOT AT ALL EXCESSIVE AND UNREASONABLE. THE REMAINING SUM OF RS.34,501/- WAS PERTAINED TO OTHER TWO DIRECTORS. I N VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.8,31,148/- AND RS.5,34,501/- ON ACCOUNT OF COMMISSION AND BONUS RESPECTIVELY PAID TO DIRECTORS AND THE SAME IS HEREBY UPHELD. REVENUES APPEAL IS, THEREFORE, DISM ISSED. 5. IN THE CASE BEFORE US, THE LD. CIT(A) HAS EXAMIN ED THE NATURE OF COMMISSION AND BONUS PAID TO THE DIRECTORS. SINCE F ACTS OF THE CASE ARE IDENTICAL TO THE FACTS FOR ASSESSMENT YEAR 2004-05, RESPECTFULLY FOLLOWING THE PRECEDENT, THE PAYMENT MADE BY THE ASSESSEE TO ITS DIRECTORS ON ACCOUNT OF COMMISSION AND BONUS IS ALLOWABLE AS DEDUCTION. 3 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH DECEMB ER, 2009. IMMEDIATELY AFTER CLOSE OF THE HEARING. (D.R.SINGH) (K.D.RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10.12.2009. PSP COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR