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2015 (7) TMI 743 - HC - Income TaxDisallowance u/s 40A(2)(b) r.w. S 40A(2)(a) - Tribunal deleting the addition - Held that:- The respondent company as well as the parent company, both are assessed to income tax at the maximum marginal rate and, therefore it cannot be said that the service charge is paid to the respondent company at a unreasonable rate to evade income tax. Even the learned Counsel Mr. Bhatt for the revenue does not dispute this fact. We are in agreement with the observations made by the Tribunal as well as the ratio laid down by the coordinate Bench of this Court in the case of (1) Commissioner of Income Tax-I vs Enviro Control Associated (P) Ltd.,[2014 (1) TMI 760 - GUJARAT HIGH COURT ] (2) Commissioner of Income Tax-III vs Ashok J Patel, [2013 (12) TMI 1480 - GUJARAT HIGH COURT] and (3) Commissioner Of Income Tax vs Indo Saudi Services (Travel) P. Ltd. as reported as (2008 (8) TMI 208 - BOMBAY HIGH COURT). So far as the Circular dated 6.7.1968 is concerned, it makes clear that the provisions under Section 40A (2) and particularly with regard to the transaction between the relatives and associates is concerned, the same shall be treated as bona fide case unless the officer finds it that one of them is trying to evade payment of tax. Considering the overall facts of the case and the ratio laid down by the Hon’ble Apex Court in the case of Commissioner of Income Tax vs Excel Industries Ltd, [2013 (10) TMI 324 - SUPREME COURT] we are of the opinion that the appeals are meritless and the same deserve to be dismissed and accordingly dismissed. - Decided in favour of assessee.
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