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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 ..... diture 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. under the same agreement the payments made earlier have been held to be genuine accepting the genuineness of the agreement and treating the same as incurred in connection of the business. provisions of Section 40A(2)(b) of the Income tax Act are not attracted in the present case. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s manner balance amount of Rs. 91.71 lacs was shown as expenditure debited in the profit and loss account. The Assessing Officer was of the opinion that the agreement did not contain any clause as per which the aircraft was to be utilized by the assessee for its guests and premier clients to avail of these facilities. Therefore, there was no commercial expediency in the said agreement. He was also of the opinion that the taxi operator was the subsidiary of the assessee and, therefore, this agreement was merely a device to make payment to the said taxi operator to reduce its tax liability. Therefore, according to the Assessing Officer, this expenditure was also not allowable under Section 40A(2)(b) of the Income tax Act. He thus passed the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was liable to pay the annual fixed charges during the terms of this agreement irrespective of the hours actually utilized by it, on the jet air. The agreement so entered by the assessee was in the interest of its business and the same was duly explained before the lower authorities. We also found that assessee being running a five star hole, to give better facilities to its premier customers, it has added facility of charter flying. As the expenditure so incurred was in the course of carrying on of the business, the same cannot be disallowed. We also found that this agreement was entered into is a commercial expediency and the assessee has negotiated the flying rates at concessional price. The payment so made was not in the nature of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w this amount as a deduction on the plea that there was no utilization of the flying hours and secondly, that the payment was made to MAL which was an associate concern of the assessee and the objective was to reduce the income of the assessee. The Tribunal considered these aspects and came to the conclusion that the assessee was liable to pay annual fixed charges as per the terms of the agreement irrespective of the hours actually utilized by it. The Tribunal also noted that the agreement was entered into by the assessee for its business purposes and it was in the interest of the assessee to have entered into such an agreement. It was observed that the assessee, being a five star hotel, in order to give better facilities to its premier cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act correcting its original assessment order on the ground inter alia, that the claim was made by the assessee for the use of the aforesaid airplane. This order was challenged by the assessee and the CIT(A) vide its order dated 30.11.2010 had set aside the aforesaid order. After passing of this order by the Assessing Officer, the SLP was dismissed on the ground that nothing survives therein. 5. The aforesaid events clearly demonstrate that under the same agreement the payments made earlier have been held to be genuine accepting the genuineness of the agreement and treating the same as incurred in connection of the business. This Court has also categorically held that the provisions of Section 40A(2)(b) of the Income tax Act are not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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