TMI Blog1973 (3) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... over Net profit as per books Rs. Rs. --------------------------------------------------------------------------------------------------------------------------------------------------- 1958-59 12,96,088 4,518 1959-60 24,75,600 63,840 1960-61 31,70,045 40,650 1961-62 33,66,189 51,335 1962-63 44,20,320 1,00,331 --------------------------------------------------------------------------------------------------------------------------------------------------- In respect of the assessment year 1962-63, a claim was made by the assessee for deduction of a sum of Rs. 2,140 paid as salary and of Rs. 31,355 paid as remuneration. The sum of Rs. 31,335 is made up of as under: Rs. (1) The remuneration paid to P. Shanmugha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to the said two persons, the assessee went in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, after considering all the relevant circumstances including the nature of the work done by these two persons in connection with the business of the firm, upheld the disallowance. There was a further appeal to the Appellate Tribunal. Before the Tribunal, it was contended by the assessee that the remuneration paid to the two persons was supported by valid agreements that the amount of remuneration in question had actually been paid to the above two persons, that the payment of the remuneration was quite justified in view of the increase in the volume of the business as also the net profits, that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons, the firm had earned considerable income in the assessment years 1958-59 and 1959-60. (iii) Even during the assessment years 1960-61 and 1961-62, Shanmugasundaram who was working in the firm had been paid Rs. 780 and Rs. 1,200 respectively and there was no claim for any remuneration in these two years. (iv) Murugesa Mudaliyar has not been shown to have contributed in any way to the increase in the turnover of the firm, though there was evidence that Shanmugasundaram rendered services to the firm. (v) The two persons are the sons-in-law of the father-partner, and the share of profit of each of the partners was found to be less than what has been given to Shanmugasundaram. For these reasons, the Appellate Tribunal felt that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer, the Appellate Assistant Commissioner as well as the Tribunal have found that Shanmugasundaram had been working in this firm in the assessment year and the earlier two years. Though there is some dispute as to the nature of the services rendered, the fact that he was attending to the business of the firm cannot be disputed. The Appellate Assistant Commissioner found that Shanmugasundaram was in fact attending to sales of yarn. But whatever be the nature of the services rendered by Shanmugasundaram, having regard to the fact that there was a sudden jump in the turnover of business from Rs. 33 lakhs odd in the assessment years 1961-62 to Rs. 44 lakhs odd in the assessment year 1962-63, it is possible to say that the increase in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into between him and the firm which provides for payment of remuneration to him by the firm of 0-3-0 in the rupee in its profits. We are, therefore, of the view that the payment of remuneration to Shanmugasundaram was only for services rendered and not for other consideration such as his relationship to the partners. It cannot be said that the remuneration paid to him was for non-business considerations. On the materials on record, we are of the view, that the remuneration paid to Shanmugasundaram was an expenditure laid out wholly and exclusively for the purpose of the business and that it was not one for non-business considerations. However, the position, so far as Murugesa Mudaliyar is concerned, appears to be somewhat different. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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