Directors’ Commission of Rs.11.36 Lakh Wrongly Reported as Profits/Dividends: ITAT Remands Issue to AO for Fresh Examination [Read Order]
The assessee had also submitted a certificate from the tax auditor, but the CIT(A) had not considered this claim
Commission - ITAT - AO - taxscan
Commission - ITAT - AO - taxscan
The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) noted that Rs.11.36 lakh paid as directors’ commission was wrongly reported in Form 3CD as profits or dividends and remanded the issue to the Assessing Officer( AO) for fresh examination.
Pravin Engineering Pvt. Ltd.,appellant-assessee, filed its income tax return for AY 2018-19, declaring total income of Rs.73,21,980/-. The case was selected for scrutiny, and the Assessing Officer completed the assessment under section 143(3), assessing income at Rs.84,67,210/-. The AO disallowed Rs.11,36,000/- paid to directors as bonus or commission, treating it as profits or dividends under section 36(1)(ii).
The assessee appealed to the Commissioner of Income Tax(Appeals)[CIT(A)], arguing that the amount was wrongly reported in Form 3CD as bonus or commission to employees and did not fall under section 36(1)(ii), supporting the claim with a certificate from the tax auditor. The CIT(A) dismissed the appeal without verifying the claim or remitting the issue to the AO, upholding the assessment.
The assessee then approached the tribunal.
Also Read: Disallowance of ₹16.28 Lakh Bogus Purchase without Rejection of Books: ITAT Restricts Addition to ₹1.29 Lakh Applying GP Rate [Read Order]
The two member bench comprising Sonjoy Sarma ( Judicial Member) and Ratnesh Nandan Sahay (Accountant Member) at the assessee had clarified that Rs.11,36,000/- paid as directors’ commission was wrongly reported in Form 3CD as bonus or commission to employees. The amount was otherwise payable as profits or dividends under section 36(1)(ii) and did not form part of profits or dividends under that section.
The assessee had also submitted a certificate from the tax auditor, but the CIT(A) had not considered this claim.
The tribunal remanded the issue to the AO, directing a fresh examination, giving the assessee a reasonable opportunity to be heard, and deciding the appeal on its merits. The assessee was also directed to comply with all notices during the remand proceedings.
Accordingly the appeal was allowed for statistical purposes.
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