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| The Tax Publishers2019 TaxPub(DT) 4208 (Mum-Trib) INCOME TAX ACT, 1961
Section 36(1)(ii)
Because of functions performed and services rendered by executive director sales of assessee-company have increased by 26% as compared to total sales of financial year 2010-11. Also there was an increase in customer basis by 76 customers, where sales were more than of Rs. 50,000. Even export sales had grown by 46% and there was substantial increase in profit before tax as compared to earlier year. In view of these facts, commission paid to executive director was duly allowable.
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Business deduction under section 36(1)(ii) - Payment of commission to director - AO alleging non-rendition of service by director -
Assessee-company claimed deduction of commission paid to executive director. AO disallowed deduction holdihg that was getting double remuneration double than other directors without rendering any service.Held: Variable component of commission was a part of remuneration package of executive director based on his performance evaluation and also considering his contribution in meeting, the financial performance of assessee company was a highly qualified person and sales of assessee-company have increased by 26% as compared to total sales of financial year 2010-11. Also there was an increase in customer basis by 76 customers, where sales were more than of Rs. 50,000. Even export sales had grown by 46% and there was substantial increase in profit before tax as compared to earlier year. In view of these facts commission paid to executive director was duly allowable.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 36(1)(iii)
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