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TMI Blog2022 (6) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... be on the basis of determining the fair market value for which payment is made. AO must establish that the payment is excessive or unreasonable which should be on the basis of material on record and cannot be based on merely surmises and conjectures. The reasonableness of the expenditure is to be seen from the view point of the businessmen and not from the view of Revenue authorities. The expediency, legitimacy and the business needs will have to be examined from the assessee's point of view and not from the department's view as held in the case of Voltamp Transformers Pvt. Ltd. [ 1980 (10) TMI 35 - GUJARAT HIGH COURT] We further find that Hon'ble Rajasthan High Court in the case of CIT vs. Consulting Engineering Group Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , AM This appeal filed by the assessee is directed against the order dated 24.01.2019 passed by the Commissioner of Income Tax (Appeals) - 12, New Delhi relating to Assessment Year 2015-16. 2. Brief facts of the case as culled out from the material on record are as under:- 3. Assessee is a company stated to be engaged in the business of dealing in sale and purchase of e-journals. Assessee filed its return of income for A.Y. 2015-16 on 29.09.2015 declaring total income at Rs. 3,82,51,540/-. The case was taken up for scrutiny and thereafter assessment was framed u/s. 143(3) of the Act vide order dated 30.12.2017 and the total income was determined at Rs. 4,08,93,800/-. Aggrieved by the order of AO, assessee carried the matter before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Salary (Rs.) Bina Balani (Director) 13,20,000 Kailash Balani (Director) 27,00,000 Megha Balani (Daughter in Law of Director) 9,00,000 6. The assessee was asked to justify the payment of salary u/s. 40(A)(2)(b) of the Act to which assessee made the submissions which was not found acceptable to AO. AO noted that in the case of Bina Balani and Kailash Balani there was hike in salary of more than 125% and 50% respectively whereas the increase in turnover of the assessee was only to the extent of 30% and therefore the increase in salary was not justifiable. He thus held the increas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any lineal ascendant or descendant of the individual. He submitted that the Daughter in Law cannot be considered to be a relative of an individual. He submitted that Megha Balani is daughter in law one of the Director and is therefore not covered within the definition of relative u/s. 2(41) of the Act. Learned AR thereafter pointed to the chart of salary which is placed at Page 4 of the paper book and from there he submitted that there was no increase in salary from A.Y. 2012-13 to 2014-15 in case of salary of both the Directors and only in the year under consideration, the salary has been increased. He further pointed to the table of turnover of different years which is tabulated at page 4 of the paper book and from there he pointed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment has been made to close associates having substantial interest in the company for goods, services and facilities. Under this section, the AO can disallow only that portion of the total expenditure, which in his opinion, is excessive or unreasonable. The onus is on the AO to form an opinion that the expenditure claimed as excessive/unreasonable having regard to the fair market value for which the payment is made. This opinion of the AO cannot be arbitrary but must be on the basis of determining the fair market value for which payment is made. The AO must establish that the payment is excessive or unreasonable which should be on the basis of material on record and cannot be based on merely surmises and conjectures. The reasonableness of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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