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2012 (7) TMI 552 - AT - Income TaxDisallowance of salary Held that:- Smt. Belwal (director) was an educated lady and after she left the assessee, she got employment at a hefty amount so therefore her working abilities cannot be doubted. Moreover, in the preceding year also, she was paid salary by assessee and no disallowance was made. Deduction of TDS on payment made to her also goes in favour of the assessee as far as genuineness of the expenses is concerned - person who receives salary as a Director cannot be expected to be involved in day today activities. His or her involvement remains at the level of making strategic decisions only and therefore the contention of the Assessing Officer that assessee could not provide proof of any services rendered by her is not correct in view of her role as an art director addition deleted - decided in favour of assessee. Addition was made u/s 41(1) of the Act by treating the old outstanding amounts as deemed income u/s 41(1) of the Act - assessee had claimed during assessment proceedings that these were un-secured loans which were taken by the assessee 15-20 years back and they have been repaid now by crediting the account of Shri Mahesh Belwal and by debiting the respective account of the lenders Held that:- Provision of section 41(1) are not attracted as these are attracted only if the liability ceased to exist by way of remission or cessation thereof - assessee has written back this amount and a corresponding credit of an equivalent amount has been given to Mr. Mahesh Belwal and therefore no benefit can be said to have arisen to the assessee In respect of Rs.3,29,748 - assessee has not written back and liability has not ceased to exist only stand taken by the Assessing Officer that the amount is outstanding for long and hence need to be written back - Held that:- Assessing Officer directed to delete the addition - appeal filed by the assessee is allowed.
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