“Section 40(6)(ii)”
The decision most relied on for Section 40(6)(ii) is CIT v. Travancore Sugars & Chemicals Ltd. (88 ITR 1), cited in 21 judgments on BharatTax.
Leading authorities on Section 40(6)(ii)
The Supreme Court's decision in CIT v. Travancore Sugars & Chemicals Ltd. is cited for the principle of diversion of income by overriding title, distinguishing it from issues related to the deductibility of certain taxes like education cess.
Commission paid to a Managing Director for services rendered is eligible for deduction under section 36(1)(ii) of the Income-tax Act, 1961, provided it is paid as per the terms of employment and not merely to avoid Dividend Distribution Tax (DDT).
A company engaged solely in software services cannot be considered a valid comparable to a company earning income from both software products and services, particularly when the comparable has diverse activities and lacks segment reporting.
