DEVAYANIAMMA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In compliance with the directions of this Court in O. P. 878 of 1966 the following questions have been referred to this court for our decision by the Income tax Appellate Tribunal, Madras Bench :-

(2.) The year of assessment with which we are concerned is 1962-1963, the corresponding accounting period having ended on the 30th of September, 1961. During that year of account one Sri. P. Gopinathan Nair who is the husband of the assessee was paid a sum of Rs. 1250 per mensem as salary. The salary fixed by the assessee for Sri. P. Gopinathan Nair for the period before 1-10-1960 was Rs, 1000/- per month. The business of the assessee is being managed by the said Gopinathan Nair, is not disputed. The business consists of dealing in cashew nuts processing of the nuts for sale either by way of export or for internal consumption. The assessee owns 8 cashew nut factories. The turnover for the year in question was 61 lakhs rupees.

(3.) On the above facts and circumstances the Tribunal found that the salary is in excess of what should reasonably be paid to a manager managing such business. To use their own words we would extract Para.8, 9 and 10 of the order passed in appeal by the Tribunal.