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2019 (10) TMI 1024 - AT - Income TaxDeduction of expenses u/s 37(1) - employee’s benefit expense - sharp increase in salary expenses as compared to the turnover - HELD THAT:- Appellant justified that the turnover of the appellant has increased by an amount of ₹ 1,10,79,362/- over the previous year which has been verified from the financial statement by the Learned CIT(A). So far as the increase of the salary of the employees namely Himanshu Shah being the Chief Financial Officer, Mr. Suresh Ramu being the Chief Executive Officer the assessee has been able to show that both the employees were paid salary only for a part of F.Y. 2011-12 whereas they were employed for full part of F.Y. 2012-13. The payment made to Shri Lalti Pai to the tune of ₹ 65,00,000/- has also been justified by the assessee taking into consideration his academic background and immense experience in this field. The payment made to Bhavesh Acharay having 19 years of experience in clinical data management and 4 years in site management was also explained by the assessee relying upon his rich qualifications and experience. All this doubts/points raised by the Learned AO were carefully considered by the Learned CIT(A) while deleting addition made by AO. We have also carefully considered the judgment relied upon by the Learned AR. We find from the judgment passed by the Hon’ble Apex Court in the matter of Sassoon J. David and Co (P) Ltd.-vs-CIT [1979 (5) TMI 3 - SUPREME COURT] that reasonableness of employee’s expenses is not relevant to claiming deduction of expenses under section 37(1) of the Act. Additionally commercial expediency/business rational of a particular expenditure incurred by an assessee for the smooth running and furtherance of its business is its prerogative and hence the same cannot be questioned by the Revenue. The question regarding tax revenue neutrality on the fact that if the income is being charged in the hands of the directors in the highest rate bracket taxing the same in the hands of the company would amount to double taxation as has been decided in the judgment of PWS Engineers Ltd.-vs-DCIT [2016 (6) TMI 596 - GUJARAT HIGH COURT] has been duly taken care of by the first appellate authority. Hence taking into consideration the entire aspect of the matter, we find no infirmity in the order passed by the Learned CIT(A) in deleting the addition applying the ratio laid down by the Juridical pronouncement as mentioned above so as to warrant interference. Thus, the question is accordingly answered in the affirmative i.e. in favour of the assessee
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