Provision of sec 36(1)(ii) not applicable in the absence of evidence and depreciation at 60% should be charged on computer

Last updated: 26 April 2012

Court :
Income Tax Appeallate Tribunal

Brief :
It was submitted that there is a major increase in sale as well as the profit of the company and that is only due to the efforts of the said director of the company. It was submitted that the provisions of Section 36 (1)(ii) will not be applicable. It was submitted that services of the director have been duly approved by the shareholders and have, in fact, been required and his services are directly co-related to his performance in the company and such payment is wholly and exclusively paid to the employees for their performance and is allowable as business expenditure. Reference was made to various decisions and it was contended that no disallowance on this account could be made. It was also submitted that for the year under consideration the return of income has been filed by the said director at ` 59,08,748/- and he has also been taxed at maximum margin rate, therefore, there is no question of evasion of tax. After considering the reply of the assessee, ld. Assessing Officer has held that provisions of Section 36 (1)(ii) were applicable, hence, he has disallowed the said amount of commission. Ld. CIT (A) has found that on similar fact and circumstances Delhi ITAT in the case of ACIT vs. Bony Polymers Pvt. Ltd. (2010) 36 SOT 456 (Delhi), has deleted the addition. Relying on the said ratio, ld. CIT (A) has deleted the addition. The department is aggrieved, hence, in appeal.

Citation :
ACIT, Circle 3 (1),New Delhi.(Appellant)Vs. Coromandel Agrico Pvt. Ltd.,3rd Floor,7, Community Centre, Near Sapne Cinema,East of Kailash,New Delhi. PAN: AABCC6812A (Respondent)