ACIT Vs. Sri Sandip Somany (ITAT Kolkata)- We find that the assessee being a Joint Managing Director of M/s Hindustan Sanitary Ware and Industries Ltd was in receipt of commission based on net profits of the company determined and finalized in the subsequent year on a consistent basis and has been offering the same as his income from salary in the year in which the profits of the company have been finalized and approved by the shareholders in the annual general meeting of the company in accordance with the provisions of Companies Act, 1956. During the assessment year 2004-05, the assessee has duly offered the commission income worked out in the manner stated supra amounting to Rs. 7,45,091/- . This is admittedly the commission entitlement of the assessee as a percentage of net profits for the year ended 31.3.2003 (Asst Year 2003-04) and the profits for which have been finalized by the company during financial year 2004-05 relevant to Asst Year 2004-05. Accordingly, the assessee has offered the same as salary income in Asst Year 2004-05 and this practice has been followed by the company year on year on a consistent basis and accepted by the revenue.
We find that this issue is squarely covered by the decision of Calcutta High Court in the case of Sanjib Kumar Agarwal vs CIT reported in (2009) 310 ITR 295 (Cal) wherein it was held as below:-
“It may be pertinent to mention here that similar issue has been recently decided by Hon’ble Calcutta High Court in the case of Sanjib Kumar Agarwal vs. CIT(2009) 310 ITR 295(Cal). In this case also the appellant was a full time Director of a company. As per the conditions of service, the appellant was to received commission at the rate of one percent on the net profit of the company apart from the monthly salary and certain perquisites, which were allowed to him. The assessing officer held that a sum of rs.1,02,464/- relating to the period July 1, 1998 to March 31, 1989, accrued as income to the assessee and was liable to be taxed for the assessment year 1989-90. Hon’ble High Court held that the commission was taxable in the year in which the profits of the company were finalized and not in the year to which the profits of the company belonged. The facts of the case of the assessee are similar to the facts of this case. Therefore, the commission of rs.75,82,091/- shall be taxable in A.Y 2005-06 and not in A.Y 2004-05.”
INCOME TAX APPELLATE TRIBUNAL, “A” BENCH, KOLKATA
Before : Shri N.V. Vasudevan, Judicial Member, and
Shri M. Balaganesh, Accountant Member
I.T.A No. 95/Kol/ 2013 A.Y : 2004-05
Assistant Commissioner of Income Tax Vs. Sri Sandip Somany
For the Appellant/ department : Shri Debasish Banerjee, JCIT, ld.Sr.DR
For the Respondent/assessee: None appeared
Date of Hearing: 14-10-2015
Date of Pronouncement: 27 -10-2015
ORDER
SHRI M.BALAGANESH, AM This appeal of the revenue arises out of the order of the Learned CITA in Appeal No.212/CIT(A)-XX/Cir-36/2011-12/Kol dated 04-10-2012 for the Asst Year 2004-05 passed against the order of assessment framed by the Learned AO u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
2. Shri.Debashish Banerjee, JCIT, the Learned DR argued on behalf of the revenue and none appeared on behalf of the assessee.
3. The only issue to be decided in this appeal is whether an addition could be made towards Commission paid to Directors pursuant to the terms of employment in the facts and circumstances of the case.
4. The brief facts of this issue is that the assessee is a joint managing director of a company named M/s Hindustan Sanitary Ware and Industries Ltd and drawing salary and commission. The assessee was in receipt of salary income and had offered salary income in the following manner in the return of income :-
