1980 (12) TMI 88

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..... ssessee family consisted of Karta Shri Ramesh Chandra Saboo, his wife Smt. Shila Devi Saboo and minor son Shri Deepak Saboo. Apart from some income from interest and annuity refund, the assessee had share of income from three firms of Gwalior. Karta Shri. R.C. Saboo was managing all the affairs of the assessee family and also looked after the interest of the assessee in the various businesses and .....

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..... ssible as a deduction. It was further urged relying upon Bombay High Court decision in the case of CIT, Bombay vs. Walchand & Co. (1967) 65 ITR 381 (SC) and Supreme Court decision in J.K. Woolen Manufacturers vs. CIT (1969) 72 ITR 612 (SC) that where payment is made for commercial expediency, its reasonableness has to be judged from the point of view of the businessman and not of the IT Department .....

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..... TO were reiterated. It was also pointed out that as a result of the service rendered by Shri R.C. Saboo, the income of the assessee increased from Rs. 33,039 in asst. yr. 1971-72 to Rs. 95,380 in the assessment year under consideration. Referring to the cases already mentioned above, it was urged that the ITO was not justified in determining the reasonable amount of the salary paid on his subjecti .....

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..... On these facts, it was urged that he was duly qualified and had the capacity to earn the salary which was paid to him by the HUF. Taking these facts into account the ld. AAC reduced the disallowance to Rs. 2,400 only. In other words, out of salary of Rs. 2,000 per mensum, the ld. AAC felt that salaries of Rs. 1,800 was justified. 4. We have heard the parties. We have also gone through the detail .....

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..... g the disallowance to that extent. We feel that the salary paid should have been allowed fully. We delete the disallowance. The assessee had also agitated before the ld. AAC the charge of interest under s. 139(8) amounting to Rs. 2,674 but this has not been considered and hence we restore this issue to the file of the AAC. 5. In the result, the appeal succeeds.
Case laws, Decisions, Judgemen .....

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