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TMI Blog2016 (9) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is bad and erroneous in law and against the facts and circumstances of the case. 2. That the learned CIT (Appeals) erred in law and on facts in holding that the salary of Rs. 7,12,400 is hit by Section 40A(2) of the Act and a sum of Rs. 3,52,400 has been rightly disallowed. 3. That the learned CIT (Appeals) erred in law and on facts in holding that the salary paid to the Director of the company is to be disallowed even though there is no tax avoidance and the order passed is contrary to by Circular No.6P issued in July, 1968. 4. That the learned CIT (Appeals) erred in law and on facts in upholding the additionofRs.38,471 being the difference between the balances in the account of M/s. Kayen Print Services Pvt. Ltd. and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2007-08 wherein the Tribunal has decided this issue in favour of the assessee and deleted the disallowance made by the Assessing Officer under Section 40A(2) of the Act. 7. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that the Assessing Officer found that there is an abnormal income in the salary of one Director namely Mrs. Malati Kulkarni, therefore the Assessing Officer has rightly applied the provisions of Section 40A(2) of the Act when there is no similar increase in the other Directors salary. 8. Having considered the rival submissions and relevant material on record, at the outset it is noted that the Tribunal in assessee's own case for the Assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the fair market value of the services. On the other hand, the Assessing Officer made the enquiry in a different direction, i.e. whether the increase in the salary as compared to the salary paid to last year was justified on facts or not. Such enquiry, in my view, is not required to be made as per the provisions of section 40A(2)(a). The scope of enquiry under the above provision is with reference to the fair market value of the services rendered. In the absence of enquiry as contemplated by the provisions of section 40A(2)(a), no disallowance could have been made or sustained. The onus was on the Assessing Officer to bring the material on record to prove that the payment made by the assessee was excessive or unreasonable having rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be a case that this particular Director was under paid in earlier year and just to bring the parity of the salary with the other Directors the salary of the Director was increased during this year. In view of the above facts as well as decision of this Tribunal in assessee's own case (supra), the disallowance made by the Assessing Officer is not justified and the same is deleted. 9. Ground Nos.4 & 5 are regarding addition made on account of difference between the balances in the accounts of M/s. Kayen Print Services Pvt. Ltd. and M/s. UPM Kymmene India Pvt. Ltd. 10. I have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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