Prakash Chemicals International Pvt Ltd Vs ACIT

Parties Involved

Facts Summary

The assessee, Prakash Chemicals International Private Limited, had filed its return of income for the Assessment Year (A.Y.) 2016-17 on 09.11.2016, declaring a total income of Rs.9,33,77,620/-. The case was selected for complete scrutiny under CASS. The Assessing Officer (AO) noticed that the commission of Rs.96,98,425/- was paid to Shri Manish K Shah, a Director of the assessee company. The AO held that this commission was paid in lieu of dividend and, therefore, it was not eligible for deduction under section 36(1)(ii) of the Income Tax Act. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which was partly allowed. The assessee is now in second appeal before the Income Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the commission paid to the Director was eligible for deduction under section 36(1)(ii) of the Act?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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