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2017 (1) TMI 568 - AT - Income TaxAddition u/s 40A (2)(a) - payments under various heads for goods and services procured from its holding company - Held that:- Adhoc disallowance cannot be made on mere suspicion rather the AO should have brought some cogent material in the form of comparables so as to justify that the impugned payments are excessive or unreasonable. Moreover, both entities being in the same tax bracket, hence the transactions are tax neutral and covered by CBDT circular number 6-P dated 06/07/1968 as stated that no disallowance is called for u/s 40A(2) in respect of payments made to relatives/sister concerns where there is no attempt to evade taxes. we are inclined to delete the impugned disallowance of 20% made u/s 40A(2). See Commissioner of Income-tax Versus VS. Dempo and Co. P. Ltd. [2010 (10) TMI 711 - Bombay High Court ] - Decided in favour of assessee Adhoc 20% disallowance of certain expenditures for want of verification of vouchers on test check basis - Held that:- The factual position is that although complete details were made available by the assessee before lower authorities but additions were made for want of verification of vouchers for 3 months on test check basis. There is nothing adverse on record with respect to expenditure in Tax Audit Report. Gujrat High court in CIT Vs. Vallbh Glass Works Ltd. (2013 (9) TMI 806 - GUJARAT HIGH COURT ) has held that where audited accounts were available with regard to the expenses claimed by the assessee and there were no adverse comments by auditor, no disallowance of such expenses should be made unless there are cogent reasons to question the genuineness of such expenditure. Mere failure to file the relevant vouchers as required by the AO cannot be the basis for disallowance unless it is found that the expenditures were not incurred wholly and exclusively for the purpose of business. Therefore, on the facts and circumstances of the case and judicial pronouncements, we are inclined to delete the impugned adhoc disallowance - Decided in favour of assessee
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