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TMI Blog1984 (3) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 40A(2)(a) of the Income-tax Act, 1961 ('the Act') on the ground that they were excessive and unreasonable. The following table shows the amounts claimed and allowed: Mathura Prasad Dhoomimal Claimed Allowed 1980-81 1981-82 1980-81 1981-82 Rs. Rs. Rs. Rs. Suresh Chandra 27,118 39,618 3,600 21,600 Mahesh Prasad 13,559 19,809 3,600 16,800 Ganesh Prasad 13,559 19,809 3,600 18,000 These persons were earlier partners in the assessee-firm and dissociated themselves by giving written notices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowances. He noticed that in the earlier years no disallowance of salaries was made by the ITO but in his view there had never been any application of mind in the previous years on the question of reasonableness of salaries and, therefore, he held that the principle of res judicata was not applicable to the present case. He took the view that the new arrangement placed the three persons in a much better position as they started getting interest on their capital balances as well as profit in the form of salary without any risk involved on their capital contributions. He also took the view that the amount of receipts to which these persons became entitled as salaried employees were more or less the same to which they were entitled before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Mahesh Prasad 12 1/2 per cent 250 per month Ganesh Prasad 12 1/2 per cent 250 per month Apart from the qualifications, etc., of these three persons mentioned above and which were taken into consideration by the ITO, the assessee had also mentioned in its reply dated 4-2-1980 that these persons had to perform some more duties like collection of money from parties and booking of orders for future supply of goods due to the reason that they were young as compared to the remaining two partners. We find that at the time when these three persons were partners in the assessee-firm they were having the same share as the surviving partners even though the surviving partners are old. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the three aforesaid persons could neither be termed excessive nor unreasonable. In coming to this conclusion, we have duly taken into consideration the qualifications and experience of these persons, the duties performed by them and the salaries payable to them in terms of the agreements executed by them individually along with the other facts and circumstances referred to above. We are, therefore, of the view that there was no justification whatsoever for the income-tax authorities to make and sustain the disputed disallowances. We hold accordingly. 5. The only other ground relates to the disallowance of miscellaneous expenses amounting to Rs. 1,000 for each of the assessment years in question out of Rs. 2,097 claimed for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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