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2019 (10) TMI 1162 - AT - Income TaxAddition u/s 40A(2)(b) - related party transactions - services rendered towards transportation and handling of cargo - HELD THAT:- Transaction is being between the related parties, hence, section 40A(2)(b) squarely applies. In the assessment order, the AO has observed that insofar as payments made by the assessee towards related party on hourly basis and to other parties are either tonnage basis or trip basis, therefore, he disallowed 1/3 payments made by the assessee as excessive and accordingly added the disallowed amount of ₹ 81,37,032/- to the total income of the assessee, which was restricted to 15% by the ld. CIT(A) and directed the Assessing Officer to adopt ₹ 36,98,651/- as expenditure incurred by the assessee. We find that the AO ought to have been quantified what is the excess payment made by the assessee to the related party instead of simply making adhoc disallowance. Even ld. CIT(A) also simply restricted the disallowance to the extent of 15%. Under the above facts and circumstances of the case, we are of the opinion that it would be reasonable to restrict the addition to 10% from 15% made by the ld. CIT(A). Appeal filed by the assessee is partly allowed.
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