ITO Vs Goverdhan Transport Company Pvt. Ltd. (ITAT Delhi)
Salary Paid, TDS Deducted—but Proof Still Matters: ITAT Remands Executive Remuneration Dispute
The Delhi Bench of the Income Tax Appellate Tribunal remanded the issue of disallowance of executive remuneration of ₹6.98 crore back to the Assessing Officer for fresh verification, holding that while the assessee had furnished extensive documentary evidence, the same required factual examination at the assessment stage.
The assessee, engaged in operating public transport buses under a public–private partnership, paid executive remuneration to 48 employees managing the operations of 111 buses and around 500 staff. Although the assessee furnished employee-wise details, PAN, TDS deductions and bank payment particulars, the Assessing Officer disallowed the expenditure under section 37(1) on the ground that summons under sections 131 and 133(6) were either unserved or remained unanswered, and field inquiries failed to locate some employees.
The CIT(A) deleted the disallowance, noting the scale of operations, commercial necessity of executive staff, TDS compliance, banking-channel payments and disclosure of salary income by employees. However, before the Tribunal, the Revenue pointed out that voluminous evidence (appointment letters, Aadhaar, PAN, ITR acknowledgements and Form 16) placed in the paper book was not available before the Assessing Officer.
Accepting this contention, the Tribunal held that the genuineness and business nexus of the remuneration must be verified at the assessment stage. In the interest of justice, the matter was restored to the Assessing Officer for de novo adjudication, with a direction to examine the evidence and grant proper opportunity to the assessee. The Revenue’s appeal was thus allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
