TMI Blog1997 (10) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowing partly the remuneration and commission paid by the assessee to his two brothers engaged as employees in his business ?" The assessee is an individual and he is carrying on the business of manufacturing three wheeler cycles. The assessee declared an income of Rs. 21,000 as the assessable income for the assessment year 1975-76. While arriving at the abovesaid taxable income, the assessee had shown to have paid a sum of Rs. 23,024 to his brother, K. R. Madhukar, as remuneration for technical and supervisory services rendered by him and a sum of Rs. 21,412 to his another brother, K. R. Vijayakumar, as commission for services rendered by him in the business carried on by the assessee for the assessment year 1975-76. The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee filed an appeal before the Appellate Assistant Commissioner, questioning the correctness of the disallowance of the abovesaid remuneration and commission to K. R. Madhukar and K. R. Vijayakumar, apart from other disallowances made by the Income-tax Officer. The Appellate Assistant Commissioner, in the light of section 40A(2)(a)(b) of the Act, agreed with the conclusions of the Income-tax Officer regarding the disallowance of remuneration and commission alleged to have been paid by the assessee to K. R. Madhukar and K. R. Vijayakumar on the ground that the Income-tax Officer was justified in coming to such a conclusion, taking into consideration the totality of the circumstances specified by the assessee in his accounts. But the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1975-76. It is not in dispute that the assessee had claimed to have paid a sum of Rs. 23,024 towards remuneration of his brother, K. R. Madhukar, for the alleged technical and supervisory services rendered by him to the assessee during the abovesaid assessment year, as against a sum of Rs. 13,908 shown as remuneration to K. R. Madhukar for the previous assessment year. Likewise, the assessee had claimed a deduction to an extent of Rs. 21,412 towards commission payable to his another brother, K. R. Vijayakumar, for the services rendered by him to the assessee in the abovesaid business during the assessment year 1975-76 as against a sum of Rs. 12,000 paid as commission paid to him in the previous assessment year. The Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer with regard to the dispute under reference. Ultimately, the fact that K. R. Madhukar and K. R. Vijayakumar are the brothers of the assessee is considered, apart from their qualifications. A perusal of the record would disclose that K. R. Madhukar is only a B. A. Psychology graduate of 27 years with no technical qualification and training. Though it was claimed on behalf of the assessee that K. R. Madhukar was employed in the Bendweld Industries and acquired some skill, no certificate has been produced to show any such employment or training. In the absence of any certificate for such technical qualification, the authorities below are justified in rejecting the affidavit filed for such technical skill as unacceptable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, experience and educational qualification, the commission allowed by the Income-tax Officer to the extent of Rs. 13,000 during the assessment year 1975-76 as against Rs. 12,000 paid during the previous assessment year, was held reasonable. It is relevant to point out that the Tribunal had also taken into consideration the insignificant increase in the turnover during the assessment year 1975-76 from the turnover of the previous assessment year. Therefore, we are of the opinion that the Tribunal has considered the three conditions specified in section 40A(2)(a) of the Act while confirming the order of the Appellate Assistant Commissioner regarding the excess or unreasonableness of the remuneration and commission alleged to have been pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, mill working, etc., and was also authorised to make purchases and enter into contracts on behalf of the company, and to draw, sign, endorse, accept and negotiate all bills of exchange, hundis and other negotiable instruments and to sign cheques for the assessee-company. The chief chemist and the chief engineer were drawing a salary of Rs. 1,500 and Rs. 2,500 respectively, as remuneration per month and the salary of the managing director and the director-in-charge had to be commensurate with the payment made to the abovesaid officers. The managing director and the director-in-charge were members of the Hindu undivided family, whose assets were used in the business of the assessee-company. Apart from that the Hindu undivided family, of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
