9911796707
TMI Blog1967 (9) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... e question referred to this court for decision is : " Whether, on the facts and in the circumstances of the case, the disallowance of Rs. 16,977 from out of the salary paid to T. Mohammed Farooq is justified." The assessee, Haji K. Assainar, was carrying on business in rice and provisions on wholesale basis with head office at Changanacherry and branches at Kottayam and Cochin. The relevant assessment year is 1959-60 and the accounting period is the Malayalam year 1133 ending on August 16, 1958. In the Cochin branch the assessee's main business consisted of commission agency sales. The net profit of this branch as per the assessee's books was Rs. 1,16,265. In arriving at this amount, the assessee had claimed deduction of a sum of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than Rs. 150 per month, the entire amount of remuneration credited to the account of Farooq could not be regarded as expenditure laid out or expended wholly and exclusively for the purpose of the assessee's business. In the view of the Income-tax Officer the payment was motivated by considerations other than commercial expediency. The accounts disclosed that Mohammed Farooq had actually drawn only Rs. 1,716.89 during the accounting year in question. But, nevertheless, the Income-tax Officer allowed an amount of Rs. 2,400, being the minimum salary mentioned in the agreement as payable to Farooq and he added back the balance as payment made for consideration other than business. The assessee took up the matter in appeal to the Appellate Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such responsible functions and the business was being conducted under the direct supervision and control of the assessee himself. He, therefore, concurred with the Income-tax Officer in his finding that the expenditure of which deduction was claimed by the assessee was not laid out or expended wholly and exclusively for the purpose of his business, but was on the other hand, motivated by considerations which were not relevant to the business. He, therefore, sustained the disallowance of Rs.16,977. The assessee appealed to the Income-tax Appellate Tribunal, but the Tribunal also held that the disallowance of Rs. 16,977 from out of the salary paid to Mohammed Farooq was fully justified on the facts and in the circumstances that obtained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to find the evidence and to give the finding then it will become an admissible deduction. The decision of such questions is for the Income-tax Appellate Tribunal and the decision must be sustained if there is evidence upon which the Tribunal could have arrived at such a conclusion." In the present case, the Income-tax Officer as well as the appellate authorities have concurrently come to the conclusion on a consideration of all the facts disclosed by the materials available on record that the payment of such a large amount to Farooq, who was only a young undergraduate studying for the B. Sc. Degree course on the date of the agreement evidenced by annexure " A " and who possessed no knowledge of commercial accountancy nor any experience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He may take into consideration the extent of the business and the particular service rendered by the employee which called for a special remuneration at the hands of his employer. He may take into consideration the quantum of the payment made with a view to decide whether the payment was or was not grossly out of proportion to the work done by the employee. If after taking these factors into consideration he comes to the conclusion that the payment was not made wholly and exclusively for the purpose of the business of the assessee, it would be open to him either to disallow the whole sum or a part of the sum paid. The question whether a particular sum was expended wholly and exclusively for the purposes of such business must essentially be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no record to show that he was in fact exercising any supervision over the staff. Admittedly, he had not been invested with power to sign cheques at the relevant time. Having regard to all these facts brought out in the evidence and to the circumstance that the person concerned is a relative of the assessee, the conclusion arrived at by the authorities below that the payment of the large amount in question by way of remuneration to Farooq was motivated not by considerations of commercial expediency but by considerations extraneous to the business, was fully warranted. It follows that the amount of which deduction is claimed was not laid out or expended wholly and exclusively for the purpose of the assessee's business, and the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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