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TMI Blog2012 (6) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... /- incurred by the assessee which was in the form of payment made to M/s Megapode Airlines Ltd. ( Now known as Taj Airlines Ltd.) . As per the respondent/assessee, this payment was made under the agreement dated 29.12.1999 with the said company doing the business of air taxi operator. The agreement was arrived at between the assessee and the said air taxi operator as per which the assessee was entitled to utilize 35 hours on its aircraft with discounted charges for flying hours utilized by the assessee. The discounted charges were fixed at Rs. 65,000/- per flying hours normally as against Rs. 25 lacs. The assessee had paid a sum of Rs. 153.3 lacs as annual fixed chargers and received a refund of Rs. 6.60 lacs for excess fixed cost recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal of the Revenue. Against this order of the ITAT, the present appeal is preferred. 2. The facts appearing on the record reveal that in respect of Assessment Year 2001-2002 also the similar payments were made by the assessee under the same agreement to the taxi operator on identical grounds, the Assessing Officer had disallowed the expenditure. The Tribunal had set aside the order of the Assessing Officer observing as under:- "5. From the above observations of the Assessing Officer, it appears that basically the Assessing Officer has declined deduction of payment firstly on the plea that there was no actual utilization of flying hours and secondly payment was made to associate concerns to reduce its income. So far as first grievance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made or the legitimate needs of the business of the assessee, or the benefit derived by or accruing from such services. In the instant case, no finding has been recorded by the Assessing Officer to show that similar facilities were available to the assessee at a lower price or that assessee has made any excessive payments. In the absence of such finding, the provisions of sec. 40A(2) cannot be invoked for making disallowance to associate concern falling under clause (b) of sec. 40/1(2) of the Act." 3. An appeal was preferred by the Revenue against the aforesaid order of the ITAT which was also dismissed by this Court vide judgment dated 03.10.2008 which is reported as CIT v. United Hotels Ltd. [2009] 177 Taxman 417 (Delhi) while holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the matter, the Tribunal observed that disallowance under section 40A(2) could only be made if the revenue had discharged its burden of proving that the expenditure so incurred was excessive or unreasonable having regard to the fair market value of the goods, services or the facilities for which the payment was made. Officer to show that similar facilities were available to the assessee at a lower price or that the assessee had made excessive payments. Consequently, in the absence of the such findings the Tribunal concluded that the provision of section 40A(2) could not be invoked for disallowing the said expenditure." 4. It would also be interested to note that the Revenue had preferred an SLP against the aforesaid decision of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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