Jasibai Dayaram Amlani Vs DCIT (ITAT Nagpur)
FMV Rent Addition Related Party Salary Disallowance Deleted – Inspector Report Isolated Statement Held Insufficient – ITAT Nagpur
In this case, the AO enhanced rental income alleging under-statement of rent received from assessee’s son by adopting higher fair market value and also disallowed salary paid to the son u/s 40A(2)(b). The CIT(A) confirmed both additions.
ITAT observed that FMV rent was estimated based on properties at Nagpur whereas the subject property was situated at Amravati and no comparable evidence was brought on record. Considering AMC standard rent, consistent rent declared, and both parties being taxed at maximum rate, the Tribunal held that rent of ₹1.80 lakh p.a. was reasonable and deleted addition of ₹1.92 lakh.
Regarding salary disallowance, ITAT noted that the son had been working in the family business for many years, rendering services at multiple locations, and the payment was duly offered to tax in his hands. The AO relied mainly on a portion of statement without disproving actual services. Tribunal held that disallowance was unjustified and allowed the claim. Appeal partly allowed.
FULL TEXT OF THE ORDER OF ITAT NAGPUR
This appeal at the instance of the assessee is directed against the order of Ld. ADDL/JCIT (Appeals), Udaipur [“CIT(A)”], dated 07/10/2025 passed u/s. 250 of the Income Tax Act, 1961 (for short, ‘the Act’) which is arising out of assessment order dated 13.12.2016 passed u/s. 144(3) of the Act by the DCIT, Amravati Circle, Amravati for the Assessment Year 2013-14 (A.Y.)
