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2021 (6) TMI 204 - AT - Income TaxDisallowance made out of marketing, sales and distribution expenses - CIT-A deleted the addition - HELD THAT:- There is no dispute about the basic fact that the assessee had indeed paid the impugned sum to its sister concern and that too, without even applying for the relevant sanction containing the approval dated 4.1.2012 qua to the period of 4 years from 7.7.2010 to 31.3.2014 only whereas we are in FY 2009-10 having accounting period up to 31.3.2010. CIT(A)’s impugned reasoning is not found to be sustainable therefore. Coupled with this, there is also no material as to whether the assessee had in fact applied for the necessary approval regarding its transactions/payments to its sister concern executed between 1.4.2009 to 31.3.2010. We thus find no reason to uphold the CIT(A)’s impugned reasoning to this effect. This Revenue’s argument is accepted in principle. Yet another equally important aspect of interplay of section 292/ 297 of the Companies Act vis-à-vis sec.40A(2)(b) of the Act dealing with expenses or payments made to the interested parties. It is not in dispute that this issue has nowhere been examined. The same is restored to the CIT(A) therefore to be adjudicated afresh within three effective opportunities of hearing. Revenue’s appeal accepted for statistical purposes. CIT(A)’s action upholding the disallowance relevant to the current year and not related to FY 2009-10 on account of its failure in filing the corresponding details in remand proceedings - Assessing officer had disallowed an amount @ 20% as claimed at assessee’s behest. The CIT(A)’s lower appellate order under challenge has resulted in enhancement thereof in above terms; and that too, without even issuing corresponding notice stipulated in sec.251 (1)(a) of the Act. We thus reverse the CIT(A)’s impugned directions and restrict the impugned disallowance to the extent of ₹ 21,45,440/- only in these facts and circumstances. Assessee’s cross appeal partly accepted.
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