GEMS EDUCATION SOCIETY,GURGAON vs. ITO, FARIDABAD

PER N. K. BILLAIYA, AM:

1.1 That the learned Commissioner of Income Tax (Appeals) has erred in sustaining the disallowance failing to appreciate that while making the aforesaid disallowance learned AO has not considered the quantum of services availed by the assessee. There is no nexus between the assessee and the related party as the learned AO had tried establishing. The services rendered by the related party i.e. Global Education Management Systems Private Limited were of valuable nature and needed by the assessee for the smooth functioning of day to day affairs.

2. That the learned Commissioner of Income Tax (Appeals) had erred in law and on facts in sustaining a disallowance of salary paid to Mrs. Sudha Rajamohan without appreciating the fact that the amount to her was reasonable considering the services rendered by her. 2.1 That in doing so, the learned Commissioner of Income Tax (Appeals) had failed to appreciate the fact that requisite documents/evidences were fded and explanation were tendered before the learned ACIT explaining the amount paid by the assessee towards the services rendered by Mrs. Sudha Rajamohan, but the learned ACIT based his decision purely on suspicion, surmises and conjectures and as such, the disallowance so made should be deleted.

3. That the learned Commissioner of Income Tax (Appeals) had erred in law and on facts in sustaining a disallowance of Rs. 12,31,416/- paid to Mrs. Sudha Rajmohan on account of salary against the services rendered to the assessee.

3.1 That in doing so, the learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that requisite documents/evidences were filed and explanation were tendered before the learned CIT explaining that Mrs. Sudha Rajmohan was employed in the capacity of the principal of assessee. She was entrusted with key responsibilities by the assessee against which she was paid salary, but the learned CIT based his decision purely on suspicion, surmises and conjectures and as such assumed that she is related with the management xo the payments were made to the benefit of person specified under section 13(3) of the Act.

3.2 The learned CIT (Appeal) misconstrued the provisions of Section 13, which carves out an exhaustive list of persons to whom such provisions apply. However, Mrs. Sudha Rajmohan do not fall under any category mentioned in the list thus amount paid to her as salary against the services rendered cannot be treated as income of institution used or applied for the benefit of the person covered under section 13(3) of the Act.

3.3 The learned CIT (Appeal) also failed to consider that the amount of salary paid to Mrs. Sudha Rajmohan was very nominal and reasonable in comparison to the salary being paid at other schools to a person of same experience and expertise.

4. That the learned Commissioner of Income Tax (Appeals) had grossly erred in recording adverse findings which are perverse and have been recorded without considering the factual substratum of the case and hence such findings are vitjatq#'-and deserves to be deleted.”