Clause 104 - Disallowance of expenditure having regard to fair market value - DIRECT TAXES CODE BILL, 2009

PART - E

PREVENTION OF ABUSE OF THE CODE

CHAPTER - IX

SPECIAL PROVISIONS TO PREVENT  EVASION

 Disallowance of expenditure having regard to fair market value

104. (1) A person shall not be allowed a deduction under this Code in respect of so much of the expenditure, whether capital or revenue in nature, as is considered by the Assessing Officer to be excessive or unreasonable if,-

    (a) the payment in respect of the expenditure has been, or is to be, made to any associated person; and

    (b) the expenditure is excessive, or unreasonable, having regard to,-

       (i)  the fair market value of the goods, services or facilities for which the payment is made;

       (ii) the legitimate needs of the business of the person; or

       (iii) the benefit derived by, or accruing to, the person therefrom.