The Tribunal held that the Assessing Officer had not carried out any exercise for holding the payment of remuneration to the directors unreasonable or not in consonance with the payment of directors or remuneration. The directors had paid taxes on the remuneration at the maximum marginal rate, and there was no revenue loss to the Department. In view thereof, in the absence of any findings by the Assessing Officer that the directors’ remuneration was excessive and unreasonable, the orders of lower authorities were to be reversed. (AY. 2012-13)
Carmel Softech Pvt. Ltd. v. ITO (2022)96 ITR 34 (SN) (Chennai) (Trib)
S. 40A(2)(b) : Expenses or payments not deductible-Excessive or unreasonable-Remuneration of directors of Private company-Directors paying taxes at maximum rate-Disallowance of payment in excess of 20 Per Cent. of net Profit not sustainable.