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TMI Blog1980 (8) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... been in its employment since 31st March, 1963. It was represented before the ITO that Mrs. Saboo was appointed in the company to look after labour welfare and also to attend to matters relating to labour relations. As to the services rendered by the lady, copies of two letters written respectively by Sri Haralal Halder and Sri Indramani Jana were produced. It was found by the ITO that these two letters dated 21st February, 1968, were written on a date when enquiries regarding the payment of salary to the lady were already afoot. As such, he refused to attach any evidentiary value to, these two letters and specially so when there was absolutely no proof as to the actual services rendered by her. The ITO issued summons to Mrs. Kamala Devi Saboo and Sri S P. Chhaochharia but there was no compliance. The assessee, according to the ITO, was required to ensure the attendance of the two persons and to produce evidence regarding the services rendered by them. It was also observed by the ITO that the lady had neither the requisite qualifications nor any experience to discharge duties alleged to have been entrusted to her. In these circumstances, the claim of the assessee remained uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case he should not have disallowed the whole amount. The two letters written by Sri Haralal Halder and Sri Indramani Jana were again placed before him in support of the contention what services had been rendered by Mrs. Kamala Devi Sahoo. After apprising the evidence, the AAC held that the ITO was not justified in wholly disallowing the salary paid to the lady. Next, he considered the issue whether the salary paid to her was laid out wholly and exclusively for the purpose of the assessee's business. After taking into account the facts that Mrs. Saboo was the wife of Sri T. C. Saboo, a top executive of the assessee-company, a man of eminence in the Birla organisation, that she did not attend before the ITO to answer regarding the duties performed by her and that the salary paid to him appeared to be disproportionately high and considering the nature of the services rendered by her and the salary paid to other employees, who were working full time, the AAC was of the view that it would be fair and reasonable to allow the salary as, revenue expenditure. Coming to the assessee's claim for deduction of salary paid to Sri S. P. Chhaochharia it was observed by the AAC that in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional ground would invoke investigation into fresh facts or the decision thereon be restricted to the facts already available on records. The Tribunal decided to admit the additional ground and remand the same to the AAC for his decision after restricting his investigation into the facts as already available on records. This would relate to the assessments for the assessment years 1961-62 to 1966-67. As to the merits of the case the observations of the Tribunal were made in paras. 30 and 31 of its order (in pages 89 to 92 of the paper book) as follows: " 30. We have carefully gone through the letters of appointment and the evidence adduced by the assessee's counsel before us. After giving due consideration to his contentions and those of the department we do not find any merit in the assessee's submissions. In this connection, we entirely rely upon the decision of the Supreme Court in CIT v. Calcutta Agency Ltd. [1951] 19 ITR 191. Therein it was held that the burden of proving the necessary facts in order to entitle the assessee to claim exemption u/s. 10(2)(xv) of the Indian Income-tax Act, 1922, was on the assessee. From the orders of the authorities below and the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckeys when there was a risk of jockies being unavailable. In the assessee I s case, there was no scheme of taking students with the prospect of future employment. We are given to understand in the course of the hearing by the assessee's counsel that Sri Chhaochharia cleared the higher secondary examination in 2nd division and the assessee had no evidence to show his brilliance justifying his induction in future as an employee of the assessee-company and that too with annual remuneration varying between Rs. 13,806 and Rs. 51,355. Sri Chhaochharia's remuneration was initially Rs. 13,806 and this was increased to Rs. 16,728 in the following year, i.e., assessment year 1965-66. Thereafter, in three succeeding assessment years, his annual remuneration was found to be Rs. 17,028, Rs. 36,300 and Rs. 51,355. The assessee had a solitary case in the, training, i.e., Sri Chhaochharia, and there was not an iota of evidence justifying such high remuneration. It was common ground that he had not rendered any service to the assessee-company and we fail to understand as to how in the circumstances of the case Sri Chhaochharia was paid that much of salary. Hereto, the authorities below justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her services and, therefore, the salary paid to her was not laid out or expended wholly and exclusively for purposes of the assessee's business was perverse and in excess of and beyond the scope of enquiry under sections 28 and 37 of the Income-tax Act, 1961 ? " For the assessment years 1967-68 and 1968-69: " 1. Whether, on the facts and in the circumstances of the case, the disallowance of salaries to Smt. Kamala Devi Saboo and the amount paid to Sri S. P. Chhaochharia was justified in law ? 2. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that Smt. Kamala Devi Saboo did not render adequate services commensurate to her services and, therefore, the salary paid to her was not laid out or expended wholly and exclusively for the purpose of the assessee's business was perverse and in excess of and beyond the scope of enquiry under sections 28 and 37 of the Income-tax Act, 1961 ?" As to question No. 2 for the assessment years 1961-62 to 1963-64 and 1964-65 to 1966-67, and question No. 1 for the assessment years 1967-68 and 1968-69, Dr. Debi Prosad Pal, learned counsel appearing for the assessee, argues that the Tribunal fell into an err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the Tribunal as to the merits of the case for the subsequent years, the order of remand becomes redundant to some extent. In this view of the matter, we would hold, in agreement with Dr. Pal, that both parties would be at liberty to adduce fresh evidence of course subject to the admissibility of such evidence by the appropriate authority in accordance with the law. In view of the findings of the Tribunal and also in view of the reasons mentioned hereinbefore, we would answer the questions in the manner indicated below : Question No. 1 for the assessment years 1961-62 to 1963-64 and 1964-65 to 1966-67 is answered in the affirmative and in favour of the revenue, subject to the condition that the parties would be entitled to adduce fresh evidence depending on admissibility of such evidence before the appropriate authority in accordance with law. For the assessment years 1967-68 and 1968-69, question No. 1 is answered in the affirmative and in favour of the revenue. Question No. 2, for the assessment years 1961-62 to 1963-64 and 1964-65 to 1966-67, is answered in the affirmative and in favour of the revenue. For the assessment years 1967-68 and 1968-69, question No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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