HIVE COMMUNICATIONS PVT LTD

ITA - 306 / 2011HC Delhi08 July 201110 pages
For Petitioner: SATYEN SETHI
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal was incorrect in upholding the disallowance. It found that the comparison with the external consultant was invalid and that the difference in job profiles meant the remuneration paid to Mr. Sushil Pandit was not necessarily excessive or unreasonable from a businessman's perspective.

What were the facts?

The Assessing Officer disallowed a portion of remuneration paid to a director, Mr. Sushil Pandit, under Section 40A(2) of the Income-Tax Act, deeming it excessive compared to payments made to another director and an external consultant. The Tribunal upheld this disallowance, though it deleted a disallowance made on another director's remuneration.

What were the issues?

Whether the remuneration paid to a director holding substantial shares was excessive or unreasonable under Section 40A(2) of the Act, considering the nature of services and business needs.

Which sections of the Income-tax Act were involved?

Section 40A(2),Section 260-A

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ITA, 306/2011

REPORTABLE *

IN THE HIGH COURT OF DELHI AT NEW DELHI

+

ITA 306/2011

JUDGMENT DELIVERED ON: JULY 08,2011

HIVE COMMUNICTION PVT. LTD. . . . APPELLANT

Through : Mr. Satyen Sethi,. Advocate with Mr. Arta Trana Panda, Advocate

VERSUS

COMMISSIONER OF INCOME TAX . . .RESPONDENT

Through: Mr.Kiran Babu, Sr. Standing Counsel

CORAM :-

HON’BLE MR. JUSTICE A.K. SIKRI

HON’BLE MR. JUSTICE M.L. MEHTA

1.

Whether Reporters of Local newspapers may be allowed to see the Judgment?

2.

To be referred to the Reporter or not?

3.

Whether the Judgment should be reported in the Digest?

A.K. SIKRI, J. (ORAL)

1.

The assessee/appellant is engaged in the business of advertising and media. For the assessment year 2005-06, it filed return declaring total income at `19,67,165/-. The assessment was completed under section 143 (3) of the Income-Tax Act (hereinafter referred to as the Act) at a total income of 2011:DHC:3393-DB

ITA, 306/2011

`62,37,332/-. While ma

The order continues below.

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