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2015 (8) TMI 39 - ITAT HYDERABAD

2015 (8) TMI 39 - ITAT HYDERABAD - TMI - Eligibility for exemption under S.11 denied - excess salary paid to Shri Navneet Chabra,Executive Director as during the year - CIT(A) allowed claim - Held that:- As can be seen from the material placed on record, total salary paid in the initial year of appointment to Shri Chabra is ₹ 10,80,000 and not ₹ 7,20,000 as noted by the Assessing Officer. Therefore, compared to the salary paid in the initial year of appointment of ₹ 10,80,000, .....

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t the salary paid is unreasonable or excessive, we do not see any reason to interfere with the order of the learned CIT(A).- Decided against revenue.

Violation of Rule 46A of the IT Rules - Held that:- It is a fact on record that assessment for the assessment year 2008-099 has been completed by the Assessing Officer under S.143(3). It is also not disputed that the assessee, being a society registered under S.12A of the Act, is obliged and duty bound to file its return of income for ea .....

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ot find any merit in the submissions of the Learned Departmental Representative that provisions of Rule 46A have been violated - Decided against revenue. - ITA No. 349/Hyd/2015 - Dated:- 24-6-2015 - B Ramakotaiah, AM And Saktijit Dey, JM,JJ. For the Appellant : Smt Amisha S Gupt, DR For the Respondent : Shri Raja B Singh ORDER Per: Saktijit Dey, Judicial Member This is an appeal by the Department against the order dated 9.1.2015 passed by the learned Commissioner of Income-tax(Appeals)- 9, Hyder .....

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he case of the assessee for the A Y 2011-12. 3. On the facts and circumstances of the case, the ld. CIT(A) erred in entertaining the letter dt.11.01.2008 from the International Trustee relating to remuneration on appointment to Col. (Retd.) Naveneet Chabra, which is additional evidence, filed by the assessee during the appellate proceedings, without giving an opportunity to the Assessing Officer, in contravention of Rule 46A of I T Rules, 1962. 4. ….." As can be seen, the issues rais .....

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report, the assessee had paid an amount of ₹ 14,51,226 as salaries to its Executive Director, Col.(Retd) Shri Navneet Chabra. The Assessing Officer has therefore, called upon the assessee to verify the details like appointment order of Shri Chabra, work allotted to him, etc. In response to the query made by the Assessing Officer, the assessee submitted the appointment letter of Shri Chabra, wherein the details of responsibilities and salary, etc. of Shri Chabra have been mentioned. The As .....

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observed that the assessee did not produce any evidence to show the increment to be given to the Executive Director. He also noted that the appointment letter does not mention payment of bonus, ex-gratia etc., whereas Shri Chabra has been paid an amount of ₹ 80,000 as Christmas Gift. Thus, the Assessing Officer concluded that the payment being made by the assessee to Shri Chabra is in violation of provision contained in S.13(1)(c) or the Act, and therefore, the assessee will not be eligibl .....

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earned CIT(A). Before the first appellate authority, it was submitted by the assessee that the Assessing Officer had committed fundamental error by wrongly observing that the salary during the first year of appointment is ₹ 7,20,000, whereas as per the initial terms of appointment, Shri Chabra was to get a scale of ₹ 60000 -10000(5) - 110000 -15,000(6)- 2,00,000. Accordingly, his salary for the period 15.1.2008 to 14.1.2009 was basic pay of ₹ 7,20,000 and after including HRA, r .....

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lusion has considered wrong facts. She also observed that the amount of salary to be paid to its Executive Director is within the authority of the assessee to determine and therefore, no disallowance under S.13(1)(c) can be made. Accordingly, she deleted the addition made by the Assessing Officer. 5. Aggrieved by the relief granted by the learned CIT(A), Revenue is in appeal before us. 6. The basic grievance of the Learned Departmental Representative is not related to the issue whether the amoun .....

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ht to the notice of the Assessing Officer, the matter may be remitted back to the Assessing Officer for examining the matter afresh. The learned Departmental Representative submitted that since the employee, Shri Chabra, is trustee of the assessee trust, violation of S.13(1)(c) also requires to be examined. 7. The learned Authorised Representative for the assessee, on the other hand, strongly supporting the order of the learned CIT(A) submitted before us that the basic foundation of the disallow .....

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sment year under consideration, then the increment value is very much low and it cannot be said that the incremental amount paid is not reasonable. It was, therefore, submitted that the learned CIT(A) was justified in deleting the addition. As far as the allegation of the department that the CIT(A) has considered additional evidence in violation of Rule 46A, the learned Authorised Representative submitted that all the information relating to salary paid by the assessee to Shri Chabra, in the ini .....

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ave considered the submission of the parties and perused the material on record as well as the orders of the Revenue authorities. At the outset, it needs to be mentioned that in the course of hearing, the learned Authorised Representative admitted that Shri Navneet Chabra, being a trustee, is a person referred in S.13(3) of the Act read with S.13(1)(c) and S.13(2)(c). As can be seen, only on the basis of the fact that an amount of ₹ 7,20,000 was paid during the period 2008-09 to the Execut .....

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the initial year of appointment of ₹ 10,80,000, the salary paid to Shri Chapbra in the year under consideration of ₹ 14,51,226 cannot be said to be excessive or unreasonable, so as to bring it within the purview of S.13(1)(c) of the Act. The Assessing Officer has not mentioned any valid reason in the assessment order to indicate that the salary paid to the Executive Director is not commensurate with the responsibilities/duties performed by him. Therefore, there being no material bro .....

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