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TMI Blog2024 (6) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... t Mr Allwyn Gomes is having the experience of 17 years in service, as compared to the other staff member at the position of clerk and having similar educational qualification. Accordingly, we find no infirmity in the findings of the learned CIT(A) in deleting the addition made by the AO in respect of salary paid to the aforesaid member. Payment of rent to persons specified u/s 13(3) - It is evident from the record, in order to justify that the payment of rent paid, the assessee furnished Market Rental Report prepared by Government Approved Registered Valuer, who computed the market rent of Rs. 14,80,024/-. However, the AO merely on ad hoc basis considered Rs. 60,000/- as the monthly rent and disallowed the balance rental payments of Rs. 9,12,000/- paid by the assessee. Therefore, we agree with the finding of the learned CIT(A) that the AO made the impugned addition on account of rental payment to specified persons u/s 13(3) of the Act without any basis. Accordingly, we find no infirmity in the findings of the learned CIT(A) on this issue and therefore, the same are upheld. Since the payment made by the assessee on account of salary and rent is not found to be excessive of what may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was selected for limited scrutiny to examine large payment of salary, rent, interest and other expenses made to specified persons u/s 13(3) of the Act. During the assessment proceedings, notice u/s 142(1) of the Act was issued to the assessee to furnish specific details in respect of aforesaid payments to specified persons. In response thereto, the assessee furnished the details regarding the name of persons/designation and amount of salary and rent paid to them. The assessee submitted that these expenses are genuine in nature and are justified by the respective clauses of the trust deed. It was further submitted that the specified persons are in occupation with the Educational Institutes run by the trust and are paid competitive salaries as required. It was further submitted that the amount of rent paid to the specified persons are genuine in nature and are as per the local rent in the localities of the trust. The assessee also furnished the report from the valuer in support of the rent payment to specified persons u/s 13(3) of the Act. 5. The Assessing Officer ( AO ) vide order dated 29/10/2019 passed u/s 143(3) of the Act did not agree with the submission of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60,000/- considered reasonable by the AO. By referring to the assessment order for the assessment years 2015-16 and 2016-17, the learned AR submitted that no addition on account of payment of salary and rent was made. The learned AR further submitted that even in the assessment year 2020-21, no addition on aforesaid aspects were made in the scrutiny assessment concluded u/s 143(3) r.w.s. 144B of the Act. 8. On the other hand, the learned Departmental Representative vehemently relied upon the assessment order. 9. We have considered the submissions of both sides and perused the material available on record. In the present case, on the basis that the assessee has made excessive payment on account of salary and rent to the specified persons u/s 13(3) of the Act, the AO denied the exemption claimed by the assessee u/s 11 of the Act. During the assessment proceedings, the AO noted that the assessee trust has made payment to specified persons u/s 13(3) of the Act as under: - S. No Name of the person Designation Amount Salary Rent Total 1 Mr. Moses M Gomes Secretary 14,93,022 4,89,600 19,82,622 2 Mrs. Jean M. Gomes President 20,32,594 4,08,000 24,40,594 3 Mrs. Tereasa Gomes Treasurer 14,77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) in deleting the addition made by the AO in respect of salary paid to the aforesaid member. 12. As per the assessee, Mrs. Jean M Gomes is designated as President, and is assigned the duty of Head- Mistress (Principal). The assessee further submitted that Mrs. Jean M Gomes is having educational qualification of B.A., M.A., B.Ed., M.Ed., P.G. Dipl. Mgmt., and having experience of 29 years in service. Accordingly, she was paid the salary of Rs. 20,32,594/- during the year under consideration. We find that the AO noted that she is the highest paid employee amongst 212 employees and another employee having similar educational qualification, i.e. B. Sc. M.Sc, B.Ed., M.Ed., was paid salary lesser than Mrs. Jean M Gomes. Accordingly, the AO considered it fair and reasonable to allow monthly salary of Rs. 75,000/-, which comes to Rs. 9 lakh for the year under consideration, and disallowed the remaining amount of Rs. 11,32,594/- paid to Mrs. Jean M Gomes. We find that Mrs. Jean M Gomes is having the highest experience, i.e. 29 years in service, as compared to the other staff member having similar educational qualification. Accordingly, we find no infirmity in the findings of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so has experience of 9 years in service. Accordingly, we find no infirmity in the findings of the learned CIT(A) in deleting the addition made by the AO in respect of salary paid to the aforesaid member. 15. As per the assessee, Mr. Elton I. Gomes is designated as member and is assigned the duty of Clerk. The assessee further submitted that Mr Elton I. Gomes is having educational qualification of B.Com and having experience of 19 years in service. Accordingly, he was paid the salary of Rs. 8,05,716/- during the year under consideration. We find that the AO by considering other employees at the position of clerk and having similar educational qualification noted that they are being paid within the range of Rs. 3-5 lakh per year. Accordingly, the AO considered it fair and reasonable to allow monthly salary of Rs. 40,000/- which comes to Rs. 4,80,000/- for the year under consideration and disallowed the remaining amount of Rs. 3,25,716/- paid to Mr Elton I. Gomes. We find that Mr Elton I. Gomes is having the highest experience, i.e. 19 years in service, as compared to the other staff member at the position of clerk and having similar educational qualification. Accordingly, we find no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO is deleted and the relevant ground of appeal is allowed. 18. It is evident from the record, in order to justify that the payment of rent paid total amounting to Rs. 16,32,084/-, the assessee furnished Market Rental Report prepared by M/s. Powle P. N. Associates, Government Approved Registered Valuer, who computed the market rent of Rs. 14,80,024/-. However, the AO merely on ad hoc basis considered Rs. 60,000/- as the monthly rent and disallowed the balance rental payments of Rs. 9,12,000/- paid by the assessee. Therefore, we agree with the finding of the learned CIT(A) that the AO made the impugned addition on account of rental payment to specified persons u/s 13(3) of the Act without any basis. Accordingly, we find no infirmity in the findings of the learned CIT(A) on this issue and therefore, the same are upheld. Since the payment made by the assessee on account of salary and rent is not found to be excessive of what may be reasonably paid to specified persons u/s 13(3) of the Act, we are of the considered view that the provisions u/s 13(3)(c), 13(2)(c) r.w.s. 13(2)(g) of the Act are not attracted in the present case, and the assessee has rightly claimed the exemption u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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