2003 (5) TMI 52

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....e finding of the Income-tax Appellate Tribunal that the increase of only Rs. 100 per month in the salaries of three employees, namely, Shri Ali Ahmed, Mohd. Ali and Ajaz Ahmad, shall be reasonable or is arbitrary and in ignorance of the conditions laid down in section 40A(2) of the Income-tax Act?" The above question arises out of the facts that the applicant is a registered firm. It employed v....

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....efused to interfere except for the observation that there appears to be a typographical error in working out these additions. The assessee preferred further appeal before the Appellate Tribunal. The Appellate Tribunal took the view that the increase in the salary of Ajaz Ahmad from Rs. 800 to Rs. 900 per month was reasonable but the increase in the salary of Ali Ahmad and Mohammad Ali was unrea....

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....not be allowed as a deduction. The reasonableness is to be determined after taking into account the legitimate needs of the business or profession of the assessee and the fair market value of the services rendered by such persons. The necessary material is to be placed by the employer before the Income-tax Officer when it increases the salary of any employee. The salary is normally raised eithe....

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.... the case of Ali Ahmad from Rs. 1,000 to Rs. 1,200 per month and that of Mohammed Ali from Rs. 500 to Rs. 900 per month for the assessment year 1975-76 was unreasonable. The increase of salary of Ajaz Ahmad from Rs. 800 to Rs. 900 per month comes to 12.5 per cent. increase. The increase of salary of Ali Ahmad from Rs. 1,000 to Rs. 1,200 per month comes to 20 per cent., the increase, in the salary ....