2025 (9) TMI 610

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....the information about excess contribution to Provident Fund, Superannuation Fund and Gratuity fund, case for A.Y. 2018-19 selected for Complete Scrutiny. Assessee is in the business of providing manpower to various business entities. During the course of assessment proceedings, ld. Assessing Officer observed that against the salary expenditure of Rs. 8,70,653/- contribution to PF and Superannuation fund amounts to Rs. 11,54,028/-. Ld. AO observed that maximum limit to which employer's contribution to PF and Superannuation fund could be made is at 27% which comes to Rs. 2,35,076/- and accordingly excess amount of contribution has been added in the hands of assessee. Ld. AO also disallowed the claim of salary expenses of Rs. 3.60 lakh given t....

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.... Rs. 2,33,25,713/- which is also subject to deduction of PF and superannuation fund contribution. Therefore, the impugned addition of Rs. 9,18,951/- is uncalled for. 5.1 So far as the salary disallowance is concerned, he submitted that assessee's wife is regularly carrying out the business affairs and in the past also salary has been given to her. Reference is made to page 76 of the paper book showing the details of salary paid to the assessee's wife from F.Y. 2016- 17 to F.Y. 2019-20 are mentioned. He also submitted that the salary income is duly offered to tax in the income-tax return. 6. On the other hand, ld. Departmental Representative supported the order of ld.CIT(A). 7. I have heard the rival contentions and perused the record pla....

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....nefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction : 9. Now from perusal of the above section, I observe that in case the Assessing Officer noticed that the payments have been made to the person referred to in section 40A(2)(b) of the Act which in this case is admittedly the relative of the assessee. Ld. AO prior to making any disallowance has to form an opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities. Now in absence of any specific finding of the ld. AO about the excessive or unreasonable expenditure having regard to the fair market valu....