High Court Of Rajasthan : Jaipur Bench
Murari Lal Khandelwal vs. CIT
Sections 37(1)
Y.R. Meena & Shashi Kant Sharma, JJ.
IT Ref. No. 32 of 1998
4th September, 2002
Counsel Appeared
Sanjay Jhanwar with P.K. Kasliwal, for the Assessee : Anuroop Singhi, for the Revenue
JUDGMENT
BY THE COURT :
On an application filed under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following question for our opinion : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in determining the reasonableness of salary paid to the sons of the applicant Shri Anoop Kumar Khandelwal and Shri Alok Kumar Khandelwal @ Rs. 3,000 and Rs. 2,500 per month, respectively, by comparing their salaries with that of the salary of a peon working with the assessee-applicant ?” The assessee is an individual deriving income from house property, investments, interest, dividend and from two proprietary concerns of M/s Khandelwal Investment Consultants, Ajmer, and M/s M.L. Khandelwal & Co., Jaipur, both carrying on the business of buying and selling of share scripts for their investor clients and also acting as brokers for public issue and earning commission and brokerage from this activity. The entire activities carried on at Jaipur by his three employees, two of them happen to be his sons Shri Anoop and Shri Alok. The assessee claimed expenditure of Rs. 1,32,000 on account of payment of salary to these two sons. The AO allowed salary to both the sons at Rs. 17,700, which was enhanced by CIT(A) to Rs. 48,000 and Tribunal has further enhanced it to Rs. 66,000 i.e., Rs. 86,000 to Anoop and Rs. 30,000 to Alok.
Learned counsel for the assessee Mr. Jhanwar submits that the amount of salary claimed on account of payment to the sons i.e., Anoop and Alock was reasonable, as both are looking after the business and assessee has got paralytic attack in the year 1983, therefore, the payment of salary to these persons at the rate of Rs. 6,000 and Rs. 5,000 per month, respectively, was justified. The facts on record reveal that both are graduates and Anoop, to whom assessee has paid Rs. 6,000 p.m. in the year under consideration was getting only Rs. 1,000 p.m. just in the preceding year. So far paralytic attack to the assessee is concerned, it happened in the year 1983. The assessee has carried on the business even after paralytic attack without the help of these two sons. We also notice that in the preceding year i.e., 1991, assessee has disclosed income of Rs. 70,000. This year he has disclosed only income of Rs. 45,673. On these facts, there is no justification of paying such heavy salary to the sons of the assessee, who are employed by the assessee for the purpose of his business.
7. It is also pertinent to note that what should be the reasonable salary is basically a question of fact and Tribunal is a fact-finding final body in this regard. Finding of the Tribunal cannot be said to be perverse on these facts. No interference is called for in the order of Tribunal. In the result, we answer the question in affirmative i.e., in favour of the Revenue and against the assessee. Reference so made stands disposed of accordingly.
[Citation : 263 ITR 642]
