2024 (7) TMI 1708

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....ome Tax (Appeals) has erred in law as well as of facts in upholding the addition of Rs. 30,28,729/- made by the Assessing Officer treating salary paid to trustees to be unreasonable applying the provisions of Section 13(l)(c) r.w 13(3) of the Act thereby restricting the denial of exemption to the amount that is held unreasonable which is arbitrary and unjustified. 2. That the submissions of the assessee justifying the payment of salary to the trustees has not been appreciated in the correct perspective and as such the order upheld is arbitrary and unjustified. 3. Without prejudice to the above, the Ld. Commissioner of Income Tax(Appeals) has erred on facts in not quantifying as to what is a reasonable amount of salary....

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....2/-     Total 23,40,000/- 30,28,729/- 27,73,450/- The Assessing officer while making the disallowance did not prove that the services were not provided by the management employees. Therefore the salaries paid to the management persons are good in eyes of law and facts and should be allowed to the assessee. 4. During the proceedings before us, the ld. Counsel for the Assessee has filed the written submissions which is as under: - "7.2 The submission of the AR in this regard is as follows: The Assessing officer while making this disallowance did not consider the following facts :- The Assessing officer while making the disallowance did not consider the fact that the salaries to these p....

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....OMICS MORE THAN 30 YEARS 4. RAJNI KATARIA TREASURER M.A ECONOMICS MORE THAN 15 YEARS The Assessing officer while making the disallowance did not prove that the services were not provided by the management employees. Therefore the salaries paid to the management persons are good in eyes of law and facts and should be allowed to the assessee. 5. The ld. CIT (A) in his order has given findings on this issue which is reproduced as under:- "7.3 The submissions of the assessee have been considered. The AO has made disallowance of salaries of Rs. 30,28,729/- paid to trustees by holding the salaries paid to be exorbitant (29.43% more than the last year). The counsel in contention stated that the trustees ....

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....gement & administration." The AO has rightly held the salaries paid to trustees as unreasonable and a way of granting undue benefits to persons covered u/s 13 of the Act. It was and would be rational to treat the entire payment of salaries as unreasonable. The assessee would not get any additional benefit due to section 13(2). In that light, the AO is directed to restrict the denial of exemption to the amount that has been held unreasonable. Accordingly, the ground of appeal is dismissed." 6. The ld. DR relied on the order of the CIT(A). 7. During the proceedings before us, the ld. counsel of the Assessee submitted that it is not the only year where salary has been paid to trustee. In fact, he brought it on record that in the immediat....