TaxTMI 
TaxTMI 
2022 (6) TMI 685
X X X X Extracts X X X X
X X X X Extracts X X X X
.... company stated to be engaged in the business of dealing in sale and purchase of e-journals. Assessee filed its return of income for A.Y. 2015-16 on 29.09.2015 declaring total income at Rs. 3,82,51,540/-. The case was taken up for scrutiny and thereafter assessment was framed u/s. 143(3) of the Act vide order dated 30.12.2017 and the total income was determined at Rs. 4,08,93,800/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 24.01.2019 granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds: 1. "Learned CIT(A) has erred on facts as well as in law in sustaining the addition of 9,00,000/- + 10,11,240/- by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cceptable to AO. AO noted that in the case of Bina Balani and Kailash Balani there was hike in salary of more than 125% and 50% respectively whereas the increase in turnover of the assessee was only to the extent of 30% and therefore the increase in salary was not justifiable. He thus held the increase in salary of the Directors aggregating to Rs. 16,20,000/- cannot be allowed and accordingly made its disallowance. 7. Assessee was also asked to justify the payment of consultancy fees to 'Megha Balani', the Daughter in Law of the Director. It was submitted that in earlier years she was paid amount of Rs. 26,31,240/- as consultancy charges and during the year she has been paid salary which is less than the consultancy charges which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncrease in salary from A.Y. 2012-13 to 2014-15 in case of salary of both the Directors and only in the year under consideration, the salary has been increased. He further pointed to the table of turnover of different years which is tabulated at page 4 of the paper book and from there he pointed that the turnover has increased from Rs. 14.27 crores in A.Y. 2012-13 to Rs. 35.80 crores and correspondingly the taxable income has increased from Rs. 10.85 lacs in A.Y. 2012-13 to Rs. 3.82 crores in A.Y. 2015-16. He therefore submitted that the observation of AO that there is no corresponding increase in sales as compared to increase in salary is misplaced. He thereafter submitted that it is a settled law that the businessman is a right person to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not be arbitrary but must be on the basis of determining the fair market value for which payment is made. The AO must establish that the payment is excessive or unreasonable which should be on the basis of material on record and cannot be based on merely surmises and conjectures. The reasonableness of the expenditure is to be seen from the view point of the businessmen and not from the view of Revenue authorities. The expediency, legitimacy and the business needs will have to be examined from the assessee's point of view and not from the department's view as held by Hon'ble Gujarat High Court in the case of Voltamp Transformers Pvt. Ltd. vs. CIT 129 ITR 105 (Guj). We further find that Hon'ble Rajasthan High Court in the case....