2013 (12) TMI 1536 - AT - Income Tax

Disallowance under section 40A(2) need to be deleted - similar facts the Tribunal has decided the issue in assessee s favour.

Summary

Issues: Disallowance under section 40A(2) of Rs. 10,80,000 and administrative expenses of Rs. 2,36,000 paid to M/s Kukreja Services Pvt. Ltd.

Analysis:
1. The assessee appealed against the order of the ld. CIT(A) confirming the disallowance under section 40A(2) and administrative expenses paid to M/s Kukreja Services Pvt. Ltd. The Assessing Officer observed that the expenses were unduly high and unreasonable, especially considering the significant increase compared to previous years. The AO disallowed the payments made to the sister concern by the assessee as per section 40A(2)(b) of the Act.

2. During the hearing, the assessee's representative referred to previous ITAT decisions in the assessee's favor for similar issues. The Departmental Representative supported the lower authorities' orders. The Tribunal considered the submissions and previous decisions in the assessee's own case for assessment years 2003-04, 2006-07, and 2007-08. It noted that in earlier years, similar additions were made by the AO but were deleted by the Tribunal, following which the addition for the current assessment year was also deleted.

3. The Tribunal relied on its previous decisions in the assessee's cases for earlier years and the absence of any contrary decisions to delete the disallowance of Rs. 10,80,000 for the current assessment year. The appeal filed by the assessee was allowed, and the addition confirmed by the ld. CIT(A) was deleted. The order was pronounced in the open court on 24th December 2013.