TMI Blog2020 (6) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... is case is on a wrong interpretation/application of the provisions. The provisions of Section 40A(2)(b) entitles disallowance on account of any expenditure being excessive are unreasonable having regard to the fair market value. In the instant case, we find that the amounts have been received from the partnership firm by the loan parties and if at all any disallowance is to be made, the same needs to be considered in the hands of the partnership firms but not in the proprietary concern. Section 40A(2)(b) does not envisage the complete disallowance of expenditure unless it is proved to be excessive or unreasonable having regard to the fair market value. No such finding with regard to the excess payment has also been established by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to be deleted. Similarly, 50% of the amount disallowed out of expenses pertaining to food supply to approximately 100 persons working for the assessed, inspite of the evidences available for supply of food, payments to food suppliers thereof and employment of is hereby directed to be deleted. Appeal of assessee allowed. - IT APPEAL NO. 856 (DELHI) OF 2017 - - - Dated:- 5-5-2020 - Amit Shukla, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Appellant : M.P. Rastogi, Adv. For the Respondent : Rakesh Kumar, Sr. Dr. ORDER DR. B.R.R. KUMAR, ACCOUNTANT MEMBER The present appeal has been filed by the assessee against the order of the Id. CIT(A)-33, New Delhi dated 28.12.2016. 2. Follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The AO after going through the bank accounts of the entities involved held that the loans received by these two individuals are infact are the amounts given by the assessed himself. The AO held that the transfer of funds from the proprietary concern of the assessee to the assessee's personal account and then to the firm wherein the assessee is a partner and from the partnership firms the amounts have been transferred to the HUF and to the mother's account and finally the amounts have been received from the account of the mother and the HUF to the proprietary concern of the assessee and keeping in view the circular route of the flow funds, the loans given are not for genuine business purpose and since the loans are not for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance on account of any expenditure being excessive are unreasonable having regard to the fair market value. In the instant case, we find that the amounts have been received from the partnership firm by the loan parties and if at all any disallowance is to be made, the same needs to be considered in the hands of the partnership firms but not in the proprietary concern. Further, the Section 40A(2)(b) does not envisage the complete disallowance of expenditure unless it is proved to be excessive or unreasonable having regard to the fair market value. No such finding with regard to the excess payment has also been established by the revenue while invoking the provisions of Section 40A(2)(b). Hence, the disallowance made is hereby directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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