The Income Tax Appellate Tribunal (ITAT), Kolkata Bench deleted the disallowance made on bonus, commission paid to the directors as per agreements of appointment.
The assessee, M/s. Hamilton & Co. Ltd. has challenged the disallowance of bonus and commission paid to the directors to the tune of Rs.15,00,000 and Rs.99,169/- respectively totaling Rs.15,99,169/- as per the agreement of their appointment with the assessee; and since the amount given to the directors were within the prescribed limit as per the Company Law, the claim of expenditure ought to have been allowed by the AO.
According to the assessee, the action of the CIT(A) to confirm the disallowance is unsustainable. And he drew our attention to the fact that similar disallowance was made by the AO in the assessee’s own case for AY 2013-14 and the issue came up before this Tribunal wherein the Tribunal was pleased to allow the claim of the assessee.
The coram of J. S. Reddy and A. T. Varkey noted that the payments in question were made to Mrs. Rekha Jalan and Mr. S.K. Jalan, who were directors of the assessee company. These payments were made pursuant to agreements for payment of bonus and commission copies of which were furnished to the Revenue. The payments were made within the limit prescribed by law.
Therefore, the Tribunal directed the AO to delete the addition of Rs.15,99,169/-.