CIT Vs. CREATIVE TRAVEL PVT LTD

JUDGEMENT

(1.) IN this appeal, the revenue claims to be aggrieved by a decision of the Income Tax Appellate Tribunal dated 30-09-2011, disposing of the appeal against an order of the Appellate Commissioner.

(2.) DURING the assessment year, 2008-2009, the assessee filed a return claiming that it paid a commission of Rs.72,25,179/- and an amount of Rs.4,50,000/-as ex gratia amount, to its directors. The Assessing Officer, in the order framing assessment, disallowed these amounts and added them back to the taxable income by relying on section 36(1)(ii) of the Income Tax Act. The assessee's appeal to the Commissioner (Appeals) was allowed. The Commissioner (Appeals) noticed that for the previous assessment year 2005-06, an identical disallowance of the commission and bonus amounts paid to the directors were directed to be deleted; the assessing officer had directed them to be added back.

(3.) THIS Court has carefully considered the submissions of the revenue, and has also considered the reasoning of the Tribunal and the Appellate Commissioner. The order of the former is elaborate, and has taken into account all the submissions of the parties, including the peculiar shareholding pattern of the assessee in this case. It is a closely-held family company which had, by resolution authorized payment of commission to working directors. The Tribunal also noticed that no commission was paid to some directors, which indicated that such category of amounts was not distributed to directors according to the company's shareholding pattern. Moreover, those who had received commission had a very small shareholding in the company. Therefore, the Tribunal found no reason to doubt that what was paid to these working directors was indeed commission, falling within the first part of Section 36 (1)(ii) of the Act which could be claimed by the assessee as such.