Periodic payments are covered under section 40(c)(iii) but Lumpsum Payment are not : HC

Brief of the Case

Bombay High court held In the case of M/s Nagpur Engineering Co. Pvt. Ltd. vs. CIT. that in order to attract ceiling u/s 40(c), the payment must be a periodical payment. A Lumsum payment or one time payment is not covered under section 40(c) of Income Tax Act, 1961.

Facts of the Case

In this case, company makes commission payments to his directors over and above the remuneration paid to them. While assessment, AO calculated the reasonable figure of commission and disallowance made u/s 40(c)(iii). Disallowance was upheld by the CIT(A) and ITAT. The following two questions have refereed by the ITAT on the application of assessee –

“1.Whether the commission on sales paid  by   the   assessee   constituted   “the  provisions   of   any   remuneration or  benefit or amenity” within the meaning  of Section 40(c)(iii) of the Income Tax  Act, 1961?

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