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Income Tax Appellate Tribunal, “SMC” BENCH : KOLKATA
Before: Hon’ble Shri J.Sudhakar Reddy, AM]
This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-6, Kolkata [ in short the ld CITA] dated 22.12.2017 against the order passed by the I.T.O, Ward-23(2), Hooghly [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short “the Act”) dated 28.06.2016 for the Assessment Year 2014-15.
The assessee is a partnership firm engaged in the business of wine merchants. It has two partners. The issue before me is the disallowance of expenditure claimed of Rs. 3,96,000/- under the head ‘Managers Remuneration’ paid to Mr. Hiranmoy Gon and Ms. Sudipta Gon.
Messrs. A.K. Shaw A.Yr.2014-15 3. On a careful consideration of the facts and circumstances of the case, a perusal of the papers on record, orders of the authorities below as well as case law cited, I hold as follows.
After hearing rival contention I find that the premises on which the AO disallowed the claim of the assessee is erroneous. The assessee is a partnership firm. The AO confused the payment of salary to manager, with that of payment of salary to a managing director or managing personnel. The fact remains that the assessee’s turnover has increased from 1.8 crores for the financial year 2009-10 to 4.14 crores for the financial year 2012-13. The Ld. CIT(A) has not passed a speaking order. Section 40A(2) does not come into play as no comparative instance have been cited by the AO to come to a conclusion that the expenditure is excessive or unreasonable, having regard to the fair market value of such services.
Thus, the ground of the assessee is allowed and the AO is directed to grant deduction of managers remuneration as claimed by the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 27.06.2018