Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 1980 (12) TMI AT This

  • Login
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

1980 (12) TMI 88 - AT - Income Tax

Issues:
Assessment of salary paid to Karta of HUF as a deduction.

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi involved the assessment of the salary paid to the Karta of a Hindu Undivided Family (HUF) for the assessment year 1976-77. The Karta, Shri R.C. Saboo, received a salary of Rs. 24,000 for managing the affairs of the HUF, which included interests in various businesses. The Income Tax Officer (ITO) disallowed Rs. 9,000 out of the total salary paid, stating that a portion of it was used for household purposes. The assessee appealed to the Assistant Commissioner of Income Tax (AAC), arguing that the increase in the HUF's income was directly attributable to the services rendered by Shri R.C. Saboo. The AAC reduced the disallowance to Rs. 2,400, considering Shri R.C. Saboo's qualifications and previous employment history. However, the Appellate Tribunal found the disallowance made by the ITO and AAC to be unjustified, stating that Shri R.C. Saboo's salary was reasonable considering his contributions to the HUF's increased income. The Tribunal overturned the disallowance and directed the AAC to reconsider the issue of interest charge under section 139(8) amounting to Rs. 2,674.

In its analysis, the Tribunal noted that Shri R.C. Saboo's qualifications and track record in increasing the HUF's income significantly justified the salary paid to him. The Tribunal emphasized that the disallowance made by the ITO and AAC lacked a valid basis, especially considering Shri R.C. Saboo's expertise and the impact of his services on the HUF's financial performance. The Tribunal concluded that the full salary paid to Shri R.C. Saboo should have been allowed as a deduction, overturning the previous disallowances. Additionally, the Tribunal directed the AAC to reconsider the issue of interest charge under section 139(8), which had not been addressed in the previous proceedings. Ultimately, the appeal by the assessee was successful, and the disallowance of the salary paid to Shri R.C. Saboo was deleted by the Tribunal.

 

 

 

 

Quick Updates:Latest Updates