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 manage

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