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2014 (3) TMI 16 - AT - Income TaxReduction of disallowance made from salary expenses Held that:- The Assessing Officer did not express any doubt about the genuineness of expenses claimed The contention of the assessee is accepted that the branches were spread mostly in Tamilnadu, the assessee had to employ persons hailing from Tamilnadu - the Assessing Officer has not doubt about the genuineness of the salary payment, even though he made certain observations about the nativity of the employees - there is no finding that the salaries were paid to related persons - the Assessing Officer has pointed out the deficiencies in the vouchers, yet the Assessing Officer did not take any step to prove that the vouchers were bogus - the issue under consideration is only that of an estimate for possible deficiencies thus, there is no reason to interfere in the decision of CIT(A) Decided against Revenue. Disallowance of "agents incentive" expenses u/s 40A(2)(b) of the Act Held that:- The section does not provide for automatic disallowance of the claim for deduction of payments made to the persons specified in section 40A(2)(b) of the Act, as assumed by the Assessing Officer - The Assessing Officer is required to form an opinion that the said expenditure is excessive or unreasonable - the Assessing Officer has failed to prove that the concerns M/s. Systematic Associates and M/s. Image Associates are related parries as defined under section 40A(2)(b) of the Act - the view entertained by the Assessing Officer that the payments made to related parties and claimed as expenditure is required to be disallowed under section 40A(2)(a) is not the correct view - the Assessing Officer has not established that the payments made to the related parties are excessive or unreasonable under the three criterias specified in section 40A(2)(a) of the Act - there is no case for making disallowance of "agents incentive" expenses by invoking the provisions of section 40A(2)(a) of the Act Decided against Revenue.
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