No disallowance for commission paid to director which already been show in his ITR by Director

M/s. Kshitij Interiors Pvt. Ltd. Vs. DCIT (ITAT Mumbai)

From the record we found that commission was paid to Mr. Bhawarlal Sharma, whole time Director of the Company, for the services rendered by him to the Company. The Director has rendered technical services to the assessee company. The commission so paid is for the services so rendered by the director and in line the principles of commercial expediency. The same are paid as per the agreed terms in the board resolution and are also at reasonable rates. We also found that the director is a whole time director and an employee of the company. Further, director is a person with technical knowledge having a first class degree in Interior line which further substantiate the fact that Mr. Bhawarlal Sharma is a technical person and his capacity and ability in effecting business activities and that the commission paid is in accordance with the board resolution passed at the beginning of the year. We also found that Mr. Bhawarlal Sharma also paid tax on the commission income received by company in his individual return. Thus, there is no tax avoidance.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

This is an appeal filed by assessee against the order of CIT(A)-17, Mumbai dated 28/05/2014 for A.Y. 2011-12 in the matter of order passed u/s.143(3) of the IT Act.