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2019 (3) TMI 1166 - HC - Income TaxDisallowance u/s 40(A) - related party transaction - sum paid to its sister concern as advisory fees - there are no documentary evidence produced when in the nature of trade such documentary evidence is not possible to be maintained as all institutions are conveyed by telephonic messages - Finding of facts - perversity - substantial questions of law - HELD THAT:- It cannot be contended that merely because there was an Agreement between the Assessee Company and the related party or the partnership firm, the Research and Advisory fees made by the Company to the partnership firm, in which one of the Directors Mr.Amarnath had a substantial interest, ought to be allowed wholly or partly as a business expenditure. The mere fact that the same person, Mr.M.Amarnath who had substantial interest in the partnership firm, was the person to whom Research and Advisory fees was paid by the Assessee Company was also the Director in the Assessee Company itself and could have rendered such advisory services to the Assessee Company in the best business interest of Assessee Company even pro bono in which he himself was the Director. Therefore, naturally a doubt could arise in the minds of the Assessing Authority about the genuineness of the payment made to the partnership firm, a related party in which the same person had substantial interest. Tribunal on the basis of materials available before it, cannot be said to have committed any perversity in making such disallowance even though resulting in the reversal of the order passed by the First Appellate Authority viz., CIT (Appeals). The Tribunal being the second and higher tier of the Appellate Forums viz., higher than the CIT (Appeal), naturally has the same and wider powers of the lower Appellate Authority and therefore reversal by the final fact find body ie., the Tribunal in all such cases need not be and cannot be declared to be perverse. The scope of Section 260-A of the Act is limited and only the substantial questions of law can be entertained and answered by the High Court u/s 260-A of the Act - DECIDED against the Assessee and in favour of the Revenue.
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