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2012 (9) TMI 614 - AT - Income TaxAssessee is a broking house for public issue. - Assessee had paid sub brokerage to its Holding Co which is a Merchant Banker - primary market brokerage was received by the assessee, whereas the entire work was done by availing the services of the sister concern company. - Held that:- As the payment made by the assessee to its holding company were actually being disbursed to the sub-brokers and the incurrence of such expenditure was for the business expediency of the assessee. The disallowance could not be made under section 40A(2)(a) and also that the amount paid by the assessee was allowable under section 37(1). No controverting material has been placed on record by AO. Decision in favour of assessee Bad debt written off & waiver of interest – Interest waived off in same year in which it was provided in books - Assessee has borrowed interest bearing funds and at the same time advanced interest free loans to its holding company – Assessee also use facilities provided by its holding company – Disallowed u/s 40A(2)(a) claim of expenditure is excessive and unreasonable – Held that:- Since the holding company incur heavy losses. Simultaneously assessee did not pay any compensation to the said concern with regard to facilities being availed by it. Therefore said amount is allowable. Decision in favour of assessee.
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