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Issues:
1. Disallowance of commission paid to a partner's son. 2. Disallowance of a portion of salary paid to employees. 3. Addition to trading results based on estimated valuation of closing stock. Issue 1: Disallowance of commission paid to a partner's son The case involved an appeal regarding the disallowance of a commission paid to a partner's son by a registered firm dealing in sarees. The Income Tax Officer (ITO) rejected the claim, stating that the payment was excessive and allowed merely because of the relationship. However, the Commissioner of Income Tax (Appeals) [CIT(A)] allowed the claim after considering detailed arguments presented by the assessee. The CIT(A) found that the son was actively involved in the business, leading to increased sales. The Appellate Tribunal upheld the CIT(A)'s decision, stating that the relief granted was justified based on the facts presented and the lack of rebuttal evidence challenging the findings. Issue 2: Disallowance of a portion of salary paid to employees The second issue involved the disallowance of a portion of the salary paid to employees by the firm. The ITO disallowed a sum of Rs. 39,000 out of the total salary paid, citing high claims compared to previous years. However, the CIT(A) accepted the arguments presented by the assessee, noting the increase in sales and the necessity to employ more staff. The CIT(A) found the amount claimed to be reasonable and deleted the addition. The Appellate Tribunal, after reviewing the arguments and materials, found no grounds to interfere with the CIT(A)'s decision, as the facts were not challenged and upheld the deletion of the addition. Issue 3: Addition to trading results based on estimated valuation of closing stock The final issue concerned an addition to the trading results based on the estimated valuation of closing stock. The ITO rejected the book results and estimated the turnover, making an addition to the firm's income. The CIT(A) considered the past history of the case and reduced the addition after finding the ITO's reliance on other firms' data to be unjustified. The Appellate Tribunal, after considering the arguments and past acceptance of trading results, deleted the addition, stating that the firm's disclosed G.P. rate was acceptable and variations were normal. The Tribunal found no basis to sustain the addition and upheld the deletion made by the CIT(A). In conclusion, the Appellate Tribunal dismissed the Revenue's appeal and cross-objection, while allowing the assessee's appeal based on the detailed analysis and findings on each issue presented during the proceedings.
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