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Income Tax Appellate Tribunal, BENCH ‘SMC’ KOLKATA
Before: Hon’ble Shri N.S.Saini, AM ]
This is an appeal filed by the assessee against the order dated 10.11.2017 of C.I.T-(A)-6, Kolkata for A.Y. 2013-14.
The assessee has raised the following grounds :- “1) ... For that the order of the C.I.T.(Appeal) vide Appeal No.: 426//CIT(A)- 6/KOL-2015-2016 is misconceived, bad on merits of facts and in law.
2) ... For that the C.I.T.(Appeal) erred in law confirming the "Disallowance of the Managerial Remuneration in as much as the Appellant by virtue of payment of the said Managerial Remuneration had been able to enhance the turnover to a considerable extent.
3) ... For that the recipients of the Managerial Remuneration had already paid "Due Taxes" on the said Remuneration received, resulting in "Double Taxation".
4) For that the rest may be argued at the time of hearing of this Appeal.”
3. The sole issue involved in this appeal is that the Assessing Officer disallowed Rs.3,96,000/- claimed by the assessee under the head “Managerial Remuneration “ which was paid to Mr.Hiranmoy Gon and Mrs. Sudipta Gon which was confirmed by the CIT(A). But on further appeal to the Tribunal, the Tribunal vacated the disallowance. He filed copy of the order of this bench of the Tribunal in the case of assessee itself in dated 27.06.2018. Hence he submitted that the issue is squarely covered in favour of the assessee by the above decision of the Tribunal and therefore following the same the addition should be deleted.
The Learned Departmental Representative agreed with the above submission of the Authorised Representative of the assessee.
5. We find that the Tribunal in A.Y.2014-15 held as under :- “2. 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.
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.
4. 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.”
6. The facts being identical respectfully following the precedent we set aside the orders of the lower authorities and delete the addition of Rs.3,96,000/- under the head ‘Managers Remuneration ‘ and allow the ground of appeal of the assessee.
In the result the appeal of the assessee is allowed.
Order pronounced in the open Court on 11.07.2018.