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2015 (10) TMI 1627 - ITAT AHMEDABAD

2015 (10) TMI 1627 - ITAT AHMEDABAD - TMI - Disallowance u/s 40A(2)(b) - Held that:- whether the payment was excessive or unreasonable having regard to the fair market value of services rendered by the payees. The ld. Assessing Officer has not brought any evidence with regard to the comparability of the services rendered by these persons vis--vis availability in the open market. The Assessing Officer has simply compared the payments with the payments made by the assessee in earlier years. The r .....

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ars, the Assessing Officer has himself allowed in three years. Therefore, we do not see any reason to interfere with the order of Ld. Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) has rightly deleted the disallowances in this year. We do not find any merit in this appeal.- Decided in favour of assessee. - ITA No. 985/Ahd/2011 - Dated:- 19-6-2015 - N. S. Saini, AM And Rajpal Yadav, JM,JJ. For the Appellant : Shri M K Singh, Sr. DR For the Respondent : Shri Rasesh .....

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in deleting the disallowance of ₹ 16,69,190/-. 4. Brief facts of the case are that assessee has filed its return of income on 31-10-2007 electronically, declaring total income at ₹ 10,86,070/-. The case of the assessee was selected for scrutiny assessment and a noticed u/s. 143(2) was issued and served upon the assessee. On scrutiny of the assessee, it revealed to the Assessing Officer that assessee had made payments in the shape of interest, shop rent and car rent to the person who .....

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r the shop at 20,10,000/- whereas, in Assessment Year 2006-07, the rent was paid at 5,28,000/-. The Assessing Officer has made disallowance at ₹ 14,82,000/-. He further found that car rentals of ₹ 3,60,000/- has been paid in Assessment Year 2007-08. The ld. Assessing Officer has disallowed these alleged excess payments on account of interest, shop rent and car rentals. 5. On appeal, Commissioner of Income Tax (Appeals) has deleted the disallowances by observing that Assessing Officer .....

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ith the assistance of ld. representatives, we have gone through the record carefully. On perusal of section 40A(2)(b), it reveals that if assessee incurs any expenditure in respect of which payment has been made or is to be made to any person referred to clause "b" of this sub-section and Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or to b .....

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e having regard to the fair market value of services rendered by the payees. The ld. Assessing Officer has not brought any evidence with regard to the comparability of the services rendered by these persons vis-à-vis availability in the open market. The Assessing Officer has simply compared the payments with the payments made by the assessee in earlier years. The requirement of the section is that such payment is to be compared with the fair market value of the services or whether these s .....

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