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2012 (10) TMI 17 - AT - Income TaxAddition u/s 40A(2)(a) on account of excess payment by the assessee to the Parent Company GSK - apportionment of common cost - CIT(A) deleted the addition on ground that the stand taken by the AO in treating the payment made by the assessee as unreasonable was unsustainable and revenue neutral - Held that:- AO has not brought on record any material to prove that payments made to GSK were not genuine or that GSK had not rendered services to the assessee. Comparable facts and figures, based on prevalent market rates, have not been brought on record to establish the basic requirement of invoking the provisions of the section that payments made by the assessee for the services availed were excessive or unreasonable. Hence, CIT(A) rightly deleted the dis-allowance. Dis-allowance for expenditure incurred on account of advertisement - As per AO assessee could not substantiate it why such expenses were necessary particularly when the assessee was paying consignment commission to the GSK for marketing of its products - Held that:- First adjudicating authority has rightly deleted the addition on finding that the expenditure was fully supported by sufficient details, that the asessee had submitted complete details of the advertisement giveaways, that genuineness of incurring this expenditure was well proved. No infirmity found in order deleting the dis-allowance. Dis-allowance u/s 40(A)(2)(a) - marketing commission to parent company GSK - Held that:- FAA has given a categorical finding that a separate agreement was entered into by the assessee with GSK for the purpose of marketing commission. Assessee had incurred the expenditure as per the said agreement. AO had not doubt the genuineness of the agreement. Though AO has held that marketing commission was excessive and justified as per the provisions of Sec. 40 A(2), yet he has not furnished any data for supporting his stand. Mere observing that payment is excessive is not sufficient to disallow the expenditure. It is not a fit case for applying section 40A(2). Deletion of dis-allowance upheld - Decided in favor of assessee
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