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2010 (9) TMI 849 - HC - Income TaxDisallowance of expenditure - AO after disallowing several items of expenditure and/or deductions, assessed the total business loss of the assessee - finding of AO that no prudent businessman will keep machinery idle and pay huge lease rentals as well as maintenance/ servicing charges, without any benefit – Held that:- In applying the test of commercial expediency for determining whether the expenditure was wholly or necessarily incurred for the purpose of business, reasonableness of the expenditure has to be adjudged from the point of view of the businessman and not of the Revenue. In the present case, it is not disputed that the dozers were required for the business of extraction and sale of iron ore which was the business of the assessee. How many dozers should be engaged was a question which could be best to be considered by the assessee. It is not the case of the Revenue that the expenditure was not bonafide and/or it was incurred by way of diversion of profits to a related person or a sister concern of the assessee. As such, the Revenue could not have gone into the question of expediency of the expenditure incurred and/or expediency of hiring of the 4 dozers. That was a matter of commercial expediency and the assessee was the best judge of it. In favour of assessee.
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