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| The Tax Publishers2020 TaxPub(DT) 1645 (Bom-HC) : (2020) 273 TAXMAN 0503 INCOME TAX ACT, 1961
Section 37(1)
Where director of assessee company submitted before AO that he was not aware about who actually looked after day-to-day business activity because for last 6 years, he was not attending office but was rather involved in consultation, answer given was quite reasonable and no adverse inference could be drawn there from, so as to disallow payments made to said director.
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Business expenditure - Allowability - Disallowance of payments made to assessee's director in from of salary/perquisites -
Issue was as regards disallowance of payments made to assessee's director in form of salary/perquisites, which was claimed as an allowable revenue expense under section 37(1). AO alleged that pursuant to search action, it was found that said director did not even know that who was responsible for day to day operation and did not attend office for more than 6 years. Held: Tribunal held that revenue had over-emphasized words in answer given by Director. Tribunal found that he was a whole time Director, rather a promoter- Director of assessee, since 1972. He was not aware about who actually looked after day-to-day business activity since for last 6 years, he was not attending office but was rather involved in consultation. The answer given was quite reasonable and no adverse inference could be drawn there from. Tribunal found that in all assessments made up to the date of the search, salary payment was allowed. Even post-search from where assessments were made under section 143(3), salary paid to director was not disallowed. Thus, no substantial question of law arose.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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