The Income Tax Appellate Tribunal (ITAT), Kolkata Bench has deleted the disallowance that has been made on
- Bonus and
- Commission
And that has been paid to the directors as per the agreement of appointment.
The assessee, M/s. Hamilton & Co. Ltd. has disputed and challenged the disallowance of
- Bonus amounting to Rs 15,00,000 and
- The commission worth Rs.99,169/- that has been paid to the directors respectively
Thus totalling Rs.15,99,169/- that is according to the agreement of their appointment with the assessee. Additionally, since the amount that has been paid to the directors is in tune with the mentioned limit as per the Company Law, the claim of expenditure should have been allowed by the AO. As per the assessee, the decision and action of the CIT(A) to confirm that the disallowance is unmaintainable and unsustainable. Moreover, similar disallowance was made by the AO in the assessee’s own case for the Assessment Year 2013-14 and the issue raised before this Tribunal wherein the Tribunal was pleased to allow the claim of the assessee.
The Coram of A.T. Varkey and J. S. Reddy noted that the payments in consideration were made to Mr. S.K. Jalan and the above-mentioned payments were made in consequence of the agreements for payment of bonus and commission copies which had been furnished to the Revenue. And it is worthwhile mentioning that the payments were made within the limit that is prescribed by law. Consequently, the Tribunal issued a directive to the AO for deleting the addition of Rs.15,99,169/-.
