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TMI Blog2009 (3) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed 25 percent of payments under section 40A(2) but the Commissioner (Appeals) and Tribunal allowed it. Held that- that the entire payment had been made to various partners and relatives. The disallowance of 25 percent made by the Assessing Officer under section 40A(2)(a) of the Act was justified. - 33 of 2007 - - - Dated:- 26-3-2009 - RAMACHANDRAN NAIR C. N., SURENDRA MOHAN K. JJ. Jose Joseph for the appellant. P. Balakrishnan and Smt. S. Jasmine for the respondent. JUDGMENT The judgment of the court was delivered by C. N. Ramachandran Nair J.- Two questions are raised by the Revenue in the appeal filed by them against the order of the Tribunal con-firming the order of the Commissioner of Income-tax (Appeals) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure of Rs. 63,23,282. In fact out of the total expenditure around Rs.54 lakhs was paid to partners or their relatives under various heads, viz., compensation, development expenses, pit filling expenses and transportation charges. Since the persons were related persons as defined under sec-tion 40A(b) of the Income-tax Act the Assessing Officer conducted enquiry and found that the bills were exorbitant and therefore he made a disal-lowance of up to 25 per cent. under section 40A(2)(a) of the Act. The appeal filed against this was also allowed by the Commissioner of Income-tax (Appeals) which got confirmed in S. A. It is against this order of the Tribunal the Department has filed this appeal. 3. So far as the first question is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the assessments that got settled in the case of the partners. 4. So far as the second issue is concerned it is not in dispute that the entire payments of around Rs. 54 lakhs out of Rs. 63,23,282 spent by the firm as having been paid to various partners or to their relatives. Since payments are made by the firm to related persons the officer was perfectly justified in scrutinising the eligibility of the claim. It is the finding of the Assessing Officer that the payments are exorbitant. The details of payments made to partners or relatives are discussed in the assessment order. Neither the first appellate authority nor the Tribunal examined the reasonableness of the expenditure in comparison to the expenditure incurred in similar case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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