2010 (11) TMI 516

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....made to Shri Anil Gupta, Chief Executive and father of the partner, was excessive and unreasonable as he was lacking required qualification and experience for holding this post and provisions contained in section 40A(2)(b) were clearly attracted on the facts of the case. The disallowance in assessment year 2007-08, made by the AO, amounts Rs.6.00 lakhs, which has also been deleted by the ld. CIT(A). As the facts are similar, we proceed with the facts in the appeal for assessment year 2006-07.   2. The facts are that the return declaring loss of Rs.12,67,574/- was filed on 31.10.2006. The assessment proceedings were initiated by issuing notices u/s 143(2) and 142(1). The assessee is engaged in the business of running a restaurant and b....

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....akhs has been paid to him. Thus, it has been held that the salary paid to him is not commensurate with his qualification, knowledge, experience and is unreasonable having regard to the duties assigned to him. It is also mentioned that similar services can be obtained by paying salary of Rs.25,000/- p.m. Therefore, it has been held that excessive salary was paid to him and the amount was quantified at Rs.9.00 lakhs. The facts for assessment year 2007-08 are similar with some further elaboration. It has been mentioned that apart from Shri Anil Gupta, Mrs. Shalini Gupta and Mr. Birju were working as Receptionist and Attendant, who were paid salaries of about Rs.1,04,500/- and Rs.77,400/- respectively for the whole year. The AO considered the s....

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.... both the years were deleted.   4. Before us, the ld. DR drew our attention towards the discussion in paragraphs nos. 4 to 6 of the assessment order and paragraph no. 5.2 of the impugned order, which has already been summarized by us. It is fairly admitted that no comparable case has been brought on record by the AO to come to the conclusion that the salary was excessive having regard to the services rendered by the employee to the assessee-firm.   5. We have considered the facts of the case and the submissions made before us. It is a fact that being the father of a partner, the provisions contained in section 40A(2)(b) are applicable to the facts of the case. Therefore, the payments made to him have to be examined in the light ....