1993 (10) TMI 53

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....justified in holding the remuneration paid in excess of 50 per cent. salary per month to Shri H. V. Navani, working director of the company, as excessive and unreasonable in terms of section 40(c) of the Income-tax Act, 1961 ?" For the assessment years 1976-77 to 1978-79: "Whether the Tribunal was justified in holding the rent of the flat at Delhi as expenses on maintenance of guest house, under the facts and circumstances of the case ?" The brief facts of the case are that Shri Navani was working as a sales executive with Messrs. Jaipur Metals and Electricals Ltd., and with effect from August 9, 1972, he was appointed as consultant by the assessee and he was provided free residential accommodation at Delhi. On August 14, 1972, a r....

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.... can examine as to whether the said expenditure is excessive or unreasonable having regard to the legitimate business needs of the company, the figures of sales and purchases at Delhi and one of the directors of the assessee-company being permanently stationed at Delhi and was looking after the day-to-day business matters of the company was also taken into consideration. The Tribunal held looking to the facts and circumstances that the Income-tax Officer was right in observing that payment made to Shri Navani was excessive and unreasonable and the legitimate business needs of the assessee do not warrant the payment that was made by the assessee to Shri Navani. In respect of the expenditure of Rs. 2,500, Rs. 6,000 and Rs. 2,500 for the as....

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....onable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom. The provisions of section 40(c) confer jurisdiction on the Income-tax Officer to satisfy himself that the remuneration paid is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom. In order to come to this conclusion, it has been examined from the point of view of commercial expediency. In the present matter, the provisions of section 40(c) were invoked and it is not a case where it could be said that the provisions of section 40(c) were not applicable. The reasonableness or otherwise of the quantum of amount could be examined by....