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2020 (8) TMI 185 - AT - Income TaxAddition u/s 40A - Disallowance of payment of rent - Assessee company has paid rent to one of its directors for its registered office - onus is on the Revenue to bring on record comparable instances wherein the rent payment for similar premises are the lower than the rent paid by the assessee-company - HELD THAT:- It is not the entire premises which have been taken on rent by the assessee- company rather the premises situated at first floor only which have been taken on rent by the assessee-company for the purpose of its business. The director of the assessee-company is staying at the ground floor and the first floor has been for taken on rent by the assessee company which is clearly specified in the rent agreement. The said premises are used as the registered office of the assessee-company as the every company registered under the Company Act is statutorily required to have a registered office within the jurisdictional limit of the concerned Registrar of Companies where all statutory and other correspondence can be received on behalf of the company. Further, on perusal of the minute books of the assessee- company, it is noted the meetings of Board of Directors and also of the shareholders in terms of annual general meetings are regularly held at this place. Thus said office premises have been used for the purposes of assessee-company’s business and it has established the necessary nexus of the rent expenses being incurred for the purpose of its business - rent payments have been made by the assessee company to one of its Directors, however, merely because payment has been made to a related person would not be sufficient to make the disallowance U/s 40A(2)(b) - There is nothing on record which has been brought by the Revenue to hold the payment as excessive. Therefore disallowance so made by AO is hereby deleted and the sole ground by the assessee-company is allowed.
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