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TMI Blog1968 (6) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was right in holding that the disallowance of salary of Rs. 6,000 and bonus of Rs. 2,500 was justified ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the addition of Rs. 18,685 on the ground of purchase inflation was sustainable ? " The year of assessment with which we are concerned is 1962-1963, the corresponding accounting period having ended on the 30th of September, 1961. During that year of account one Sri P. Gopinathan Nair who is the husband of the assessee, was paid a sum of Rs. 1,250 per mensem as salary. The salary fixed by the assessee for Sri P. Gopinathan Nair for the period before October 1, 1960, was Rs. 1,000 per month. That the business of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry nearly ten times this cannot be said to have been made out of purely business consideration. The assessee returned an income of Rs. 28,125 ; is against this the claim of salary and bonus to the general manager, Gopinathan Nair, amounted to Rs. 20,500. In the preceding year, i.e., 1961-62, the department allowed Rs. 6,000 and the assessee accepted this. In the year 1960-61, as against a claim of Rs. 11,484, the department allowed only Rs. 3,242 and this was also accepted. " The question arising in such cases for determination has now been well settled and it is hardly necessary to refer to any else other than the recent pronouncement of the Supreme Court in Commissioner of Income-tax v. Walchand and Co. Private Ltd. We shall extract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be a proper payment for a particular person. Two factors have been relied on by the Tribunal. One of these is that in the two previous years the income-tax authorities decided to slash what has been paid to the said Gopinathan Nair by the assessee and that these decisions were not challenged. This, we do not think, has any relevancy in deciding the question as to what can be reasonably claimed as an expenditure coming under section 10(2)(xv) of the Indian Income-tax Act, 1922, for the particular year in question. The other circumstance relied on by the Tribunal is a comparison of the salaries paid by others engaged in similar business to their so-called managers. Comparisions in such circumstances are always dangerous and not at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icy decisions will have to be taken regarding purchases, in circumstances, where there is bound to be a clamour for raw materials, due to its scarcity. On such decisions will depend the question whether profit will be made or not. There are eight factories and these have to be managed. It was suggested that the so-called managers in each of the factories drawing a salary of Rs. 150 per month would discharge the managerial functions in these factories. The suggestion seems to be ridiculous. It is difficult to get even a clerk for Rs. 150 in this State and it is impossible to imagine that a person capable of discharging managerial functions can be obtained for Rs. 150 per month. Even if they are called managers, they cannot be understood as m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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