ITAT DELHI
Coil Company (P.) Ltd. v/s. ACIT
IT Appeal Nos. 1389 (Delhi) of 2009
2648 (Delhi) of 2010 and 425 (Delhi) of 2011
[Assessment Years 2005-06 to 2007-08]
MAY 25, 2012
ORDER
Rajpal Yadav, Judicial Member-In this bunch of three appeals, ITA No. 452/Del/2011 in assessment year 2006-07 is directed at the instance of revenue against the order of Learned CIT(Appeals) dated 18.11.2010. Whereas, in assessment years 2005-06 and 2007-08, assessee is in appeal against the orders of Learned CIT(Appeals) dated 13.2.2009 and 31.3.2010 respectively. The major common issue involved in all these appeals relates to allowability of the commission paid to Shri Sucha Singh, Managing Director of the company under section 36(1)(ii) of the Income-tax Act, 1961. In the appeals of assessee, this is the only issue involved, whereas in the appeal of revenue apart from this issue, two more grounds of appeal have been taken, which relates to allowance of depreciation on computer peripheral @ 60% and, deletion of Rs.20,06,234, which was added by the Assessing Officer by making a disallowance out of miscellaneous expenses.
2. First, we take the common issue involved in all the three appeals relating to allowability of commission paid to Sardar Sucha Singh, MD of the assessee company under sec. 36(1)(ii) of the Income-tax Act, 1961.
3. The brief facts of the case are that assessee is a private limited company engaged in business of manufacturing and sale of fan, coil units, child water coils, fluid cooler, air cooling unit and other items. In the year 1995, the company has 20 share, having capital of Rs.100 each. These shares were held by two individuals, namely, Jagjit Singh & Sucha Singh in equal shares. On march 31, 2003, the total share capital of the assessee was 4002000. The total number of shares are 40020. These shares were retained by four individuals and one company, namely, Sucha Singh Rs.25,000, Harjinder Kaur Rs.10,500, Amardeep Singh 20, Pramjeet Singh 500, Coil Company INC 4000. On 10.3.2003, the Board of Directors had passed a resolution that looking to the advantage of good business relationship of Sardar Sucha Singh, MD, sales promotion commission @ 1% on the total turnover of the company, be paid to him w.e.f. Ist of April 2003. Under this resolution, commissions have been paid to Sardar Sucha Singh. The following table would depict the assessment year, amount of commission paid and the status of the dispute in respect of that amount:
