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TMI Blog2011 (9) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Patel, appearing for the assessee, pointed out that in the assessment order, the AO mechanically, following his own decision for the assessment year 2005-06 made the following disallowances: (1) In the case of partners Rs. 7,34,657/- (2) In the case of Shri Rameschandra B. Patel HUF Rs. 92,199/- Rs. 8,26,856/- 3. On appeal, in the impugned order, the ld. CIT(A), following his order for the immediately preceding assessment year i.e. 2005-06 dated 18.03.2008 in appeal no. CIT(A)-XI/472/07-08, deleted the addition. Against the order of the ld. CIT(A) for the assessment year 2005-06, an appeal was filed and the Tribunal vide its order dated 07.01.2011 in ITA No.2056/Ahd/2008, deleted the addition of Rs. 8,11,902/- made on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to the assessee therefrom. Hon'ble jurisdictional high Court recently observed in Coronation Flour Mills vs. ACIT,188 Taxman 257 that in relation to the disallowance under the provisions of section 40A(2) of the Act, a plain reading of the provision reveals that where an assessee incurs any expenditure in respect of which payment is required to be made or has been made to any person referred to in clause (b) of section 40A(2) of the Act and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to (a) fair market value of the goods, services or fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pages 567 to 570 of the reported judgment, considered the scope of the aforesaid provision in the light of the extant provisions of section 40 and observed that the goods, services and facilities referred to in section 40A(2) (a) are those which have a market value and which are commercial in character. In the case of Chhajed Steel Corporation vs. Asstt. CIT (2000) 69 TTJ (Ahd) 232 : (2001) 77 ITD 419 (Ahd) it was held that the provisions of ss. 40(b) and 40A(2) operate in different fields and the provisions of s. 40A have no application in the cases where s. 40(b) has been applied. Likewise, Hon'ble Karnataka High Court in the case of N.M. Anniah & Co. vs. CIT 1975 CTR (Kar) 78 : (1975) 101 ITR 348 (Kar) held that s. 40A has no appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn by the ld. CIT(A). Therefore, ground nos. 1 & 2 in this appeal are dismissed." 4. On the basis of the above, the Ld. Counsel of the assessee submitted that the matter is squarely covered by the decision of the Tribunal in assessee's own case for the assessment year 2005-06 (supra). Therefore, the view taken by the ld. CIT(A) for the assessment year 2006-07 be upheld. 5. On the other hand, Shri S.P.Talati, Sr.D.R., appearing on behalf of the Revenue, could not controvert the aforesaid submissions made by the ld. Counsel of the Assessee. 6. Having heard both the sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that the ld. CIT(A) has deleted the disallowance of Rs. 8,26,856/- under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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