Excess salary paid to MD in contravention of limit provided under co. Act was taxable as income: ITAT
Sunil MALOO
Excess salary paid to MD in contravention of limit provided under co. Act was taxable as income: ITAT
IT : Excessive salary paid to assessee, Managing Director of a company, in contravention to provision of Companies Act was to be construed as income of assessee provided same was not recovered from assessee by its company and allowed to remain with him
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[2018] 95 taxmann.com 49 (Chennai - Trib.)
IN THE ITAT CHENNAI BENCH 'B'
Nate Nandha
v.
Assistant Commissioner of Income Tax, Non-Corporate Circle-3, Chennai*
AND A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
IT APPEAL NO. 278 (CHNY.) OF 2017
[ASSESSMENT YEAR 2009-10]
JUNE 8, 2018
Section 5, read with section 15, of the Income-tax Act, 1961 - Income - Accrual of (Salary) - Assessment year 2009-10 - Whether illegal payment or payment received by assessee contrary to provisions of Companies Act by way of salary had to be construed as income of assessee provided same was not recovered from assessee - Held, yes - Assessee, a Managing Director of company, MBDL, received a salary of Rs. 1.37 crores - As per companies Act, salary of Managing Director should not exceed ceiling of 5 per cent of net profits of company - Accordingly, MBDL revised salary of assessee at Rs. 27.76 lakhs - Salary already paid to assessee was not recovered by MBDL and it was allowed to remain with assessee - Whether in absence of recovery of amount paid to assessee even if amount was paid contrary to provisions of Companies Act, it had to be construed as income of assessee - Held, yes [Para 10] [In favour of revenue]
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