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TMI Blog2023 (11) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... empt income despite the fact that the assessee failed to produce documentary evidences during assessment proceedings from which it can be establish the nexus that own capital of the company has been used in the exempt income investments. 2. On the facts and in the circumstances of the case and in law the Id. CIT(A) has erred in restricting the addition to Rs. 19,20,000/- as against addition of Rs. 48,00,000/- made by the assessing officer u/s 40A(2)(b) of the I.T, Act observing that the persons have been associated with the Company since its inception and have been paid the salaries for rendering the services despite the fact that the assessee failed to prove as to how the alleged four employee being relatives of the Director, qualify to draw such a huge salary without any special skillset and poor educational qualification. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-4, Surat ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the Ld. CIT (A) may be set aside and that the assessing officer may be restored to the above extent. 5. The assessee craves to add, amend, alter, substitute, modif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the assessee is having a owned funds to the tune of 436 crores. Therefore, it has to be presumed that own funds are used for making investment yielding to exempt income. Further, above proposition he has relied on the jurisdictional High Court in the case of CIT vs. Torrent Power Ltd., [2014] 363 ITR 474 (Guj) and also CIT vs. Hitachi Home & Life Solutions (I) Ltd., [2014] 221 taxman 109 (Guj) directed the Assessing Officer to deleted the addition. We find from the order that the ld.CIT(A) that the assessee is having a owned funds to the extent of 436 crores as on 31.03.2013 investments made by the assessee to generate the exempt income only to the extent of 8.05 crores. Therefore, the ld.CIT(A) reasonable presumed that assessee has invested only own funds no borrowed funds. By considering the facts and circumstances of the case, we find that there is no error passed in the order passed by ld.CIT(A), therefore ground raised by the Revenue is dismissed. 12. Ground No.5 in the assessment order, the Assessing Officer noted that the commission amount of Rs. 12,52,434/- was in respect of turnover of earlier years and therefore the same was to be disallowed. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Coordinate Bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra). We find no reason to interfere in the above said order of Co-ordinate Bench, therefore respectfully following the binding judgment of Co-ordinate Bench in the assessee's own case, we dismiss ground No.1 raised by the Revenue. 5. Ground No.2 raised by the revenue, relates to confirmation of addition made by ld. CIT(A) to the tune of Rs. 19,20,000/-. 6. Brief facts qua the issue are that the ground No.2 raised by the Revenue is relating to disallowance of salary expenses u/s 40A(2)(b) of the Act, in respect of four (4) relatives of the Directors of Rs. 48,00,000/- (Rs.12,00,000/- x 4). According to the assessing officer, the 4 lady members who have been given the salaries are the shareholders of the assessee-company and the assessee has paid the salaries to these 4 lady members to avoid payment of Dividend Distribution Tax. The second argument of the Assessing Officer was that no evidence was furnished that the said lady members attended office and rendered their s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subsequently, in AY 2013-14, the salary was increased in the range of Rs. 2.40 lacs to Rs. 3.08 lacs each and from, AY 2014-15, it: was further increased to Rs. 6,00,000/- each per annum. The increase of 100% in the impugned AY is not as per the general trend of increasing the salaries of the employees, Considering the fact that: they were getting the salary of Rs. 6,00,000/-each per annum, for last 2 years, an increment of 20% of the salary would be the justifiable increase as per the normal trend in the several other companies. Accordingly, a salary of Rs. 7,20,000/- per lady employee is directed to be allowed being paid wholly and exclusively for the purposes of the business of the assessee. Accordingly, out of Rs. 48,00,000/- disallowed by the assessing officer, the addition of Rs. 19,20,000/- (Rs.4,80,000/- [x] 4) u/s 40A(2)(b) of the Act is sustained. The assessee gets relief of Rs. 28,80,000/-. Ground No.3 is partly allowed." 8. Aggrieved by the order of ld. CIT(A), the Revenue is in further appeal before us. 9. The Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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