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2011 (7) TMI 539 - AT - Income TaxDisallowance u/s 40A - Transport charges - Excessive or unreasonable expenses - Held that:- As it is seen that on 8th July 2006, the market rate was Rs. 600 per 10 kilo litre whereas on 3rd July or 14th July 2006, the assessee has paid transport charges at Rs. 610/- per 10 kilo litre, i.e. difference is only Rs. 10/- per kilo litre as compared to other transporters - However, find that there is no material on record to show that on the same very date the lower market rate was prevailing against which the assessee has made the higher payment. AO was required to compare the said price which prevailed in the local market on the same date which he failed to do so - In the absence thereof and keeping in view the observation of the CIT(A) that the difference is not very abnormal, in the view that the ad hoc disallowance of 10% made by the AO reduced by the CIT(A) to 5% without bringing on record any supporting material is not sustainable in law and accordingly, delete the disallowance made by the AO and sustained by the learned CIT(A) - The grounds taken by the assessee are, therefore, allowed.
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