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2012 (8) TMI 518 - ITAT, MUMBAIDisallowance of reimbursement of expenses u/s 40A (2) (b) - Held that:- As the assessee is sharing staff, office premises, etc. with its parent company the allocation of the expenses have been identified as per the memorandum of understanding which were to be borne out by the parent company and to be reimbursed by the assessee. Nowhere the AO has spelled out as what were the expenses, which have been reimbursed are unreasonable or excessive looking to the fair market value of the services and expenses reimbursed - nowhere it has been brought on the record as to how the reimbursement of 33.98 crores on salary account for use of parent company’s employees is unreasonable or excessive - no concrete evidence or material to allocate the unreasonable and excessive expenses for the purpose of disallowance under Section 40A (2). Once, the CIT (A) has come to the conclusion that arrangement of expenses is correct and bonafide and is in accordance with the terms of agreement between both the parties, then no ad hoc disallowance of any amount is called for - in favour of assessee.
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