Salary Paid to Specified Person Not Excessive Where Justified by Experience and Responsibilities : ITAT

Case: ITO (Exemptions) v. Indian Rugby Football Union

Court: ITAT Mumbai

ITA No.: 5298 (MUM) OF 2025

Assessment Year: 2020–21

Date of Order: January 30 th , 2026

Brief Facts:

• The assessee was a charitable trust engaged in promoting rugby-football in India and registered under section 12A of the Income-tax Act, 1961.

• For the Assessment Year 2020-21, the assessee filed its return declaring nil income and claimed exemption under section 11.

• During the year, it paid salary of ₹46.50 lakhs to Mr. Naseer Hussain, a specified person under section 13(3), being the son of a trustee and holding the position of Chief Executive Officer.

• The Assessing Officer (AO) held that the remuneration paid was excessive and unreasonable. He allowed salary of ₹25 lakhs and disallowed ₹21.50 lakhs, invoking section 13(1)(c) read with section 13(2)(c).

• Consequently, exemption under section 11 was denied and total income was assessed at ₹2.19 crores.

• On appeal, the Commissioner (Appeals) deleted the disallowance, holding that the remuneration was not excessive, particularly in view of consistent relief granted in earlier assessment years. Aggrieved, the Revenue preferred an appeal before the Tribunal.

Observations of the Tribunal: The Court observed that:

• The issue was repetitive in nature, as similar disallowances had been made in earlier years and consistently deleted by the Commissioner (Appeals), against which no appeal was filed by the Revenue.

• It was noted that Mr. Naseer Hussain possessed approximately 25 years of experience in sports and 15 years of experience in the related sports industry. He had served as National Development Manager (2008-2012), General Manager (2012-2016), and Chief Executive Officer (2016-2023).

• He played a pivotal role in securing long-term investments and grants for the development of rugby-football in India.

• The Tribunal found that the increase in remuneration was attributable to enhanced roles and responsibilities and was duly approved by the governing body of the trust.

• The findings of the Commissioner (Appeals) were based on proper appreciation of

  facts and consistent precedents in the assessee’s own case.

Accordingly, the ITAT held that remuneration paid by a charitable trust to a specified person would not attract section 13(1)(c) merely on account of relationship, where such payment is commensurate with qualifications, experience, and responsibilities discharged. In the present case, as the salary paid to the CEO was justified and not excessive, exemption under section 11 could not be denied. The appeal of the Revenue was accordingly dismissed, and the order of the Commissioner (Appeals) was upheld in favour of the assessee.