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2012 (11) TMI 160 - AT - Income TaxIn genuine commission payment - Held that:- The two ingredients that the payment was made on contractual basis and the arrangement was found to be & bona fide one are yet to be established in this case - the final conclusion of the AO was not based upon this provision rather the impugned disallowance was based upon the provisions of section 37(1). From the side of the assessee, few case laws have also been cited for the legal proposition that in a case where there is no saving of tax, then the transaction should not be disallowed - an individual has certain standard deductions, specially a lady and also avail the benefit of the limit of non-taxable income along with statutory deductions prescribed in the statute for an individual. Therefore, case laws as cited by assessee is applicable when all these factors are also taken into account to consider the argument of “Revenue Neutral”, therefore to conclude that the CIT(A)/AO has not examined some of the basic reasons for disallowance it proper to restore this issue back to the file of AO to arrive at the correct judicial decision - in favour of assessee for statistical purposes. Disallowance of rent on DG set - high lease-rent being paid by the assessee-company to an interested party - Held that:- If an expenditure is not wholly for the purpose of the business, but partly for the purpose of the business, then only that part is allowable. The words “wholly and exclusively”, thus refer to the motive and the object behind the expenditure. The object has to be exclusively as also solely for running of the business - AO has decided the percentage of disallowance on the basis of the expected annual return on such investment no circumstance the disallowance as made by the AO should be enhanced while we are restoring this ground back to the stage of the AO with the direction that the assessee shall place on record the basic requirement of business necessity for taking on hire the impugned DG set - in favour of assessee for statistical purposes. Disallowance of miscellaneous expenses - Held that:- As an amount of Rs.10,352/- could not be explained by the assessee even at the appellate stage, thus upto that extent, the addition was confirmed - against assessee.
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