Issues in Corporate Taxation. - jb nagar cpe study circle of wirc of icai

Facts & Background
• The assessee is in the business of share trading;
• The assessee paid commission to its employee-directors who were also its
only shareholders;
• AO’s contentions
• Payment of commission was in lieu of dividend and used as tax
avoidance tool & not eligible for deduction u/s. 36(1)(ii)
• Disallowed commission under Section 36(1)(ii) of the Act
Legal Provision
• Section 36(1)(ii) (Other deductions) provides that
– “any sum paid to an employee as bonus or commission for services
rendered, where such sum would not have been payable to him as
profits or dividend if it had not been paid as bonus or commission”
August, 2011
CA Sanjeev Lalan, Singrodia Goyal & Co.
Presentation at JB Nagar CPE Study Circle
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