9911796707
TMI Blog2024 (8) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act should not be disallowed without proper justification. Therefore, the ground of the assessee is allowed. Expenses of Salary, Car Expenses, Depreciation , Office and Other Expenses - HELD THAT:- While allowing such claim as business expenditure u/s. 37 of the Act, provisions of section 40A(3) of the Act should not be ignored. We have observed that entire amount of salary is paid in cash (Rs.16000/- per month). Also, Car expenses to the extent of Rs. 21,800/- (Rs. 10,500/- and Rs. 11,300/-) are incurred in cash. When the assessee is claiming any expenditure against the business income provisions related to such claim need to be adhered to. In light of the provision of section 40A(3) of the Act, we, therefore, upheld the addition and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed an appeal before the Ld.CIT(A), who upheld the addition of Rs. 16,75,102/-. 4. The assessee is now in appeal before us against the said order of the Ld. CIT(A) with the following grounds of appeal: 1. The Learned Commissioner of Income Tax (Appeals) - NFAC, Delhi [therein after referred to as the Learned CIT(A) ] has erred in law and on facts as much as confirming the addition of Rs. 9,60,000/- made by the learned AO without considering the facts that the assessee has earned income which falls under section 28(v) of the Income Tax Act, which is considered as business income and expenditure incurred i.e. Salary paid by assessee to his son to the tune of Rs. 9,60,000/- to earn business income is allowable expenditure u/s. 37(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need to be deleted by passing appropriate order. Further, the assessee craves leave to add, amend, alter or delete all or any of the grounds of appeal at the time of hearing of the appeal. Ground No. 1: 5. The Ld.Counsel for the assessee contended that the salary of Rs. 9,60,000/- paid to the assessee's son is a legitimate business expenditure as it was incurred wholly and exclusively for the purpose of business. He further stated that the assessee is partner in three firms, and he needed assistance in executing the business of these firms. Assessee s son is also engaged in the similar business and have expertise in real estate business, hence he was assisting the assessee for conducting business of one firm. He also stated that the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Remuneration from the firm 56.20% Rs. 24,00,000 Total . Rs. 42,71,013 100% 7.3. However, the assessee has claimed deduction towards salary paid to his son of Rs. 9,60,000/- only against taxable part of benefit, i.e. Remuneration from the firm of Rs. 24,00,000/-. Therefore, in our opinion, this expenditure will be reasonable if allowed proportionately. We, therefore, allow Salary to the extent of Rs. 5,39,520/- (i.e. 56.20% of Rs. 9,60,000/-). Thus, Ground No.1 of assessee s appeal is partly allowed. Ground No. 2: 8. The assessee's counsel argued that the disallowance of Rs. 2,70,507/- made by the AO in respect of insurance premium of son of the assessee under Section 80C of the Act is incorrect as the same is allowed under the Act. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation Rs. 11,555, Office and Other Expenses Rs. 98,540/-. 11. We have gone through the details and evidence submitted. In our opinion, the reasonableness of business expenditure should be judged from the point of view of the businessman and not the Revenue. However, while allowing such claim as business expenditure u/s. 37 of the Act, provisions of section 40A(3) of the Act should not be ignored. We have observed that entire amount of salary of Rs. 1,92,000/- is paid in cash (Rs.16000/- per month). Also, Car expenses to the extent of Rs. 21,800/- (Rs. 10,500/- and Rs. 11,300/-) are incurred in cash. When the assessee is claiming any expenditure against the business income provisions related to such claim need to be adhered to. In light of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
