[aurangabad_ca] Re: [Indian-CA] Allowability of payment of commission to non whole time directors under Income tax act

Friday, December 11, 2009 4:07 AM By Livemail

 

Dear Brajesh
 
For commission allowablity it has to prove that this commission is paid for any work done.
In your case directors are professional so it is in support of point that this is for work done by them or for some commercial consideration.
it is general observation from various cases.
Sorry, but I couldn't find exact case for this situation.
 
Thanks/Regards
Prashant Gupta


From: Brajesh Agarwal <bagarwal@ocl.in>
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Sent: Wed, December 9, 2009 5:31:42 PM
Subject: [Indian-CA] Allowability of payment of commission to non whole time directors under Income tax act

 

Dear Friends,
 
A company has passed a special resolution to pay the commission to its non whole time directors as per the limits prescribed under Companies Act, 1956. However the Assessing Officer while doing the assessment has asked the assessee to show cause why the commission paid to its non whole time directors should not be disallowed. The AO has opined that whatever is given in the Companies Act, a deduction of expenses can not be allowed for that under the Income Tax Act.
 
The directors of the company are independent directors and are renowned person in their profession like CA, lawyer, banker, technocrat etc.
 
Members are requested to share their views on the allowability of commission paid to non whole time directors by the company along with relevant case law, notification, circular etc. which supports their view.
 
With best regards,
CA brajesh agarwal

 9818623388 (m)

 

 

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