Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 502 - AT - Income TaxAddition u/s 40A(2)(b) - disallowance of milk transportation charges paid to specified persons - HELD THAT:- The provisions of section 40A(2)(a) of the Act are attracted where a person makes payment to the related parties as defined in section 40A(2)(b) at a price which is higher than the market price. In this regard, the Revenue authorities have to come to a finding after the onus is discharged by the assessee to establish that it has not paid any price higher than the market price to the related parties. AO in the present case while working the disallowance had considered total transactions of assessee company for transportation of milk, whereas the same should be restricted only to the transaction of milk through the directors. In this regard, the CIT(A) has re-worked the disallowance in the hands of assessee. We find merit in the working of CIT(A) to this extent. However, while working out the cost of milk transportation per litre, CIT(A) by an error has adopted the figures after taking the ratio of milk transported in litres per rupee, in fact the ratio to be applied is rupees/per litres transported. The assessee has filed the tabulation in this regard and the payment to related parties works out to 62 paise per litre as against 69 paise per litre paid to unrelated parties. In such circumstances, there is no merit in making any disallowance under section 40A(2)(b). For this limited purpose, the Assessing Officer is directed to verify the working of assessee and delete the addition made in the hands of assessee. Appeal of assessee is allowed.
|