D.C.I.T. Vs. M/s. Associated Pigments Ltd. (ITAT Kolkata)
Commission to Director based on % of Profit is allowable in the year of Profit Determination
The Ld. Counsel contended that the commission was payable by the assessee company to its Managing Director @ 1% of the profits of the concerned financial year. He has contended that since the profit of the financial year 2009-10 was determined only in the financial year 2010-11 after finalizing the account, the allow ability on account of commission was crystallized only in the financial year 2010-11 relevant to assessment year 2011-12. We find merit in this contention of the ld. Counsel for the Assessee. Since, the commission to the Managing Director was payable by the assessee company on the profits and the profits for the financial year 2009-10 was determined only in the year under consideration after finalizing the account. The allow ability on account of commission was crystallized in the year under consideration and the Ld. CIT(A) in our opinion was fully justified in allowing the same. We do not find any infirmity in the order of Ld. CIT(A) on the issue and upholding the same. We dismiss the ground no.1 of the Revenue appeal.
