Bonus to director cannot be disallowed on mere suspicion of dividend distribution

DCIT Vs M/s. BMR Business Solutions Pvt. Ltd (ITAT Delhi) The AO in the assessment order was of the view that the amount of Rs. 1.78 crores paid by the assessee to its Director Mr. Sanjay Mehta, and claimed as bonus was not allowable in view of section 36(1)(ii) of the Act because the sum was actually payable as dividend. However, it has been observed by Hon’ble Courts that there are certain limitations and restrictions in the matter of payment of dividend and discretion of the company either to pay or not to pay dividend cannot be assumed. We find that the Assessing Officer has not brought ...