Nat Steel Equipment Private Limited Vs DCIT (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai has ruled in favor of Nat Steel Equipment Private Limited, dismissing appeals filed by the revenue department for the Assessment Years 2009-10 and 2010-11. The Tribunal’s decision addressed two key issues: the disallowance of commission paid to Mr. Darayus A. Bathena under Section 36(1)(ii) of the Income Tax Act, and the disallowance of remuneration and commission paid to Mr. Zoru Bathena under Section 40A(2)(a) of the Act.
Commission to Mr. Darayus A. Bathena (Section 36(1)(ii))
The first point of contention involved an addition of Rs. 1,20,00,000/- made by the Assessing Officer (AO) under Section 36(1)(ii) concerning commission paid to Mr. Darayus A. Bathena. The ITAT noted that the facts and issue for A.Y. 2010-11 were identical to those in the revenue’s appeal for A.Y. 2009-10 (ITA No. 4681/Mum/2013). Consequently, the Tribunal’s previous order for A.Y. 2009-10 on this matter was applied mutatis mutandis (with necessary changes) to the present appeal. The grounds raised by the revenue challenging this commission payment were dismissed.
Remuneration to Mr. Zoru Bathena (Section 40A(2)(a))
The second and more detailed dispute concerned the deletion of an addition of Rs. 34,15,500/- (30% of Rs. 1,13,85,000/-) related to remuneration paid to Mr. Zoru Bathena. The AO had disallowed this amount under Section 40A(2)(a), claiming it was commission and that its reasonableness had not been proven.
