Allowing the appeal the Tribunal held that  there had been a 775 per cent. increase in the remuneration to the directors as compared to the earlier assessment years and the objective of section 40A(2) was to prevent evasion of tax through excessive or unreasonable payments, this provision should not be applied in a manner which would create hardship in bona fide cases. The Assessing Officer had not brought any comparable cases on record to establish his allegation that the salary paid to the directors was excessive as compared to the salary being paid similar persons with similar qualifications and experience. Though the Commissioner (Appeals) had given partial relief to the assessee by limiting the disallowance to Rs. 12,60,000 he also did not consider this aspect of the case and had reduced the disallowance in an ad hoc manner. The assessee-company and its directors were both in the same tax bracket, the highest and, therefore, there could be no question of any evasion of tax by paying remuneration to the directors. CBDT Circular No. 6-P dated July 6, 1968 clearly states that no disallowance was to be made under section 40A(2)(b) in respect of payments made to relatives and sister concerns where there was no attempt to evade tax. This circular was binding on the Department and since clearly no case of evasion of tax was made out and the Assessing Officer had not pointed out any comparables to demonstrate that the salary paid to the directors was excessive, the entire addition was liable to be deleted.( AY.2012-13)