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2016 (7) TMI 175 - HC - Income TaxDisallowance u/s 40A (2)(b) - payment for consultancy services provided by group companies - unreasonable and excessive expenditure - Held that:- From the record, it is clear that the technical people of Araham Developer Pvt. Ltd. have rendered the services for helping the appellant (assessee) in rendering the consultancy services to Bakeri Group. Without the help of the employees of M/s. Araham Developer Pvt. Ltd. it would not have been possible for the appellant (assessee) to render the services to various associations of Bakeri Group. The entire payment of ₹ 10 lakhs to Araham Developer Pvt. Ltd. can be considered as reasonable, looking to the services rendered by them. Therefore, we find that the Tribunal has committed an error while passing the impugned order. Payment of R.10 lakhs to M/s. Araham Developer Pvt. Ltd. was wholly and exclusively for the business purpose and the same could not be disallowed simply by invoking the provisions of Section 40A(2)(b). Provisions of section 40A (2) (b) couldn't be invoked mechanically and simply for the reasons that the payment was made to a group concern - Decided in favour of assessee
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