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2013 (12) TMI 1480 - HC - Income TaxDisallowance u/s. 40(A)(2b) - ITAT deleted addition - Held that:- So far as the disallowance made under section 40A(2)(b) of the Act on the ground of motor bus rent is concerned, it appears that the AO disallowed 5% of the total payments towards motor bus rent by observing that the assessee has failed to reconcile the difference in payments as per tax audit report and as submitted during the assessment proceedings and had also not produced any comparative prices. The learned CIT(A) deleted the said disallowances by observing that the AO has not made out any case for excessive or unreasonable payments to the related purpose towards the motor bus rent. The learned CIT(A) also observed that no comparative prices for similar transport services was cited by the AO and therefore, was not justified in making ad-hoc disallowance of 5% under section 40A(2)(b) of the Act and therefore, the CIT(A) as such rightly deleted the disallowances made under section 40A(2)(b) of the Act. Considering the provisions of Section 40A(2)(b) of the Act and the Evidence Act, if the AO was of the opinion that the payment for which disallowance is claimed, is excessive or unreasonable. In that case, it was for the AO to assess fair market price and give comparative instances for payment for similar transport service. In absence of such comparative cases brought on record, as rightly observed by the ITAT it was not open for the AO to make disallowance under section 40A(2)(b) of the Act. We are in complete agreement with the view taken by the ITAT and the observations made by the learned ITAT while deleting disallowances made by the AO under section 40A(2) (b) of the Act on motor bus rent. No error has been committed by the learned ITAT which calls for interference of this Court. - Decided in favour of assessee. Disallowance made under section 40(a)(ia) i.e. with respect to retrospective operation of the amendment in Section 40(a)(ia) by Finance Act, 2010 - Held that:- The said question is squarely covered against the revenue by decision of the Division Bench of this Court in Commissioner of Income Tax -Ahmedabad IV Versus Omprakash R. Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT] wherein held that the amendment in section 40(a)(ia) of the Act by Finance Act, 2010 would apply retrospectively.- Decided in favour of assessee.
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