Section 40A(2)(b) cannot be invoked if no excessive or unreasonable payment

M S Hostel Vs DCIT (ITAT Ahmedabad) The case of M S Hostel vs. DCIT (ITAT Ahmedabad) revolves around the disallowance of salary payment to Smt. Palak A. Shah under Section 40A(2)(b) of the Income Tax Act, 1961. The appellant, M S Hostel, paid a salary of Rs. 4,20,000 to Smt. Palak A. Shah, the Administrative Head, and deducted TDS. The tax authority disallowed the expense, claiming it to be excessive and a sham transaction to evade tax. However, the appellant argued that the salary was justified for the services rendered by Smt. Palak A. Shah, who possessed an MBA degree and managed various as...