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| The Tax Publishers2020 TaxPub(DT) 0240 (Del-Trib) INCOME TAX ACT, 1961
Section 40A(2)(b)
For applying section 40A(2) it was for AO to make out a case that expenditure incurred was excessive or unreasonable having regard to fair market value of concerned services, however, no efforts had been made by AO in this regard. Hence, there was no justifications for AO to disallow salary payment to employees who were relatives of Director.
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Business disallowance under section 40A(2)(b) - Excessive or unreasonable payment - Salary paid to employees who were employees of director - No case made by AO to prove that salary was excessive or unreasonable having regard to fair market value of concerned services
Assessee-company claimed deduction of salary paid to relatives of Director. AO invoked section 40A(2)(b) and made disallowance. Held: For applying section 40A(2) it was for AO to make out a case that expenditure incurred was excessive or unreasonable having regard to fair market value of concerned services. However, no efforts had been made by AO in this regard. Hence, there was no justifications for AO to disallow salary payment to employees who were relatives of Director.
Relied:Uper India Publishing House (P) Ltd. (1979) 117 ITR 569 (SC) : 1979 TaxPub(DT) 844 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-2011
INCOME TAX ACT, 1961
Section 37(1)
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