Genuine salary paid to members of an association of persons is deductible when services are actually rendered and payment is not disputed.

A delay in filing the appeal was condoned because the assessee showed sufficient cause: the appeal fee challan had been applied for in time but was received only later, and the revenue did not effectively rebut that explanation. Salary paid by an association of persons to two members was held deductible where the payment was genuine, not disputed by the assessing authority, and made for services actually rendered; it could not be disallowed merely because the recipients were beneficiaries of the business. The prior year's allowance on similar facts also supported the claim, and the disallowance was set aside.

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Issues: (i) whether the 30-day delay in filing the appeal should be condoned; and (ii) whether salary paid to two members of an association of persons was allowable as a deduction.

Issue (i): Whether the 30-day delay in filing the appeal should be condoned.

Analysis: The assessee explained that the appeal fee challan was applied for in time but was received only later, and the revenue did not satisfactorily controvert this explanation. The explanation established sufficient cause for the delay.

Conclusion: The delay was rightly condoned and the appeal was admitted.

Issue (ii): Whether salary paid to two members of an association of persons was allowable as a deduction.

Analysis: The payment was genuine and was not doubted by the assessing authority. The disallowance rested only on the ground that the recipients were beneficiaries of the business. Where members of an association of persons are paid salary for services rendered, the claim cannot be rejected merely on the basis that the payment is to members themselves. The earlier assessment year had also seen salary allowed on similar facts.

Conclusion: The disallowance of salary of Rs. 6,000 was unsustainable and was set aside.

Final Conclusion: The assessee succeeded on the only substantive issue in dispute and the appeal was allowed.

Ratio Decidendi: Salary paid by an association of persons to its members is deductible when the payment is genuine and for services actually rendered, and it cannot be disallowed solely because the recipients are beneficiaries of the business.

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