Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (12) TMI 1079 - ITAT KOLKATAAddition made u/s 40A(2) - assessee had purchases of goods from its holding company in excess of the fair market value - Held that:- The onus is on the ld AO to bring the fair market value of the goods purchased by bringing in comparable cases ; onus is on the ld AO to bring on record that the payment for purchases has resulted in some benefit derived by the other person to whom the payment has been made. Only in such cases, he could disallow to the extent that such payment is found to be excessive or unreasonable in his opinion. In the instant case, the ld AO had not brought any comparable cases on record to disprove the purchases made from holding company by the assessee. - Decided in favour of assessee Disallowance made u/s 40A(2) towards salary and professional fees paid to Chandana Poddar - Held that:- The business acumen is developed by a person not by educational qualification but by his / her sheer native intelligence and presence of mind which does not come from education alone. We also find that the assessee had made total payments only to the extent of ₹ 12 lakhs to Mrs Chandana Poddar as against ₹ 13 lakhs disallowed by the revenue, which was not rectified even when specifically brought to their notice. We find that in the instant case, the assessee had duly provided the complete details of nature of services rendered by Mrs Chandana Poddar. If the revenue had got any apprehension regarding the same, nothing prevented them from questioning her by recording a statement by resorting to process of issuing summons procedure contemplated u/s 131 of the Act. In the absence of bringing any other evidence to the contrary, no disallowance could be made in the facts and circumstances of the case. AO had merely disallowed the entire expenditure as not meant for the purpose of business. If that be so, he ought not to have invoked the provisions of section 40A(2) of the Act. We also find that the ld AO had without prejudice had also tried to disallow the said expenditure u/s. 37 of the act as not meant for the purpose of business. We find that this action of the ld AO is purely without any basis and is merely based on surmise and conjecture. - Decided in favour of assessee Disallowance of interest paid on borrowed funds on a proportionate basis - Held that:- The revenue did not adduce any evidence to show that the borrowed capital was utilized by the assessee for non-business purposes. We find that the test of commercial expediency is proved in the instant case beyond doubt and hence the interest paid on borrowed capital is to be allowed. We hold that the interest paid on borrowed funds in the sum of ₹ 5,34,24,658/- would be squarely allowable as deduction u/s 36(1)(iii) of the Act. - Decided in favour of assessee
|