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TMI Blog2015 (1) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... e on 30.11.1997, declaring its total income at Rs. 9,11,630/-. Pursuant thereto, the case of the assessee came to be examined and it was issued notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961 (for short, 'the Act'). Subsequently, the concerned AO made certain additions / disallowances and assessed the income of the assessee at Rs. 31,34,611/-. The assessee, hence, approached the learned CIT(A) by way of an appeal and the CIT(A) dismissed the same. Being aggrieved with the same, the assessee carried the matter before the Tribunal, wherein, the Tribunal passed the impugned order. Hence, the present appeal. 3. At the time of admitting the present appeal, this Court framed the following questions of law; &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der; "8. That the assessee who is in the business of transportation claimed disallowance with respect to motor bus rent paid to various persons for transportation contracts. The AO was of the view that the assessee has failed to produce any comparative market price and that the nature of work carried out by the aforesaid persons is general in nature. The AO disallowed Rs. 15,49,163/for AY 2005-06 and Rs. 14,97,668/- for AY 2006-07 out of the total payment of bus rent under section 40A(2)(b). With respect to AY 2006-07 AO also made disallowance of Rs. 93,25,426 made under section 40(a) (ia) of the Act by holding that the amendment carried out by Finance Act, 2010 can be held to be retrospective from AY 2005-06. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(b) of the Act, the learned ITAT has observed and held in para 7 as under: 7. It is plain on principle that, so far as disallowance under Section 40A(2) for payment being excessive or unreasonable can only be made when the payment is made to the specified persons under clause 40A(2)(b) and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market price of the goods, services or facilities for which the payment is made. The opinion of the Assessing Officer for the expenditure being excessive or unreasonable is to be formed vis-avis fair market price of such goods services or facilities. It is thus sine qua non for making a disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance under section 40A(2) nor the onus of explaining such a variation is on the assessee. A tax auditor is an independent professional and any errors in his report cannot be put to assesses disadvantage. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. We are in complete agreement with the view taken by the ITAT and the observations made by the learned ITAT while deleting disallowances made by the AO under section 40A(2)(b) of the Act on motor bus rent. No error has been committed by the learned ITAT which calls for interference of this Court. No question of law much less any substantial question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) as well as learned ITAT have rightly deleted the disallowance of Rs. Rs. 1,22,13,280/- made by the AO u/s 40A(2)(b) of the Act. We are in complete agreement with the view taken by the learned Tribunal. Under the circumstances, question no. 2(a) is answered against the revenue." 6. Thus, from the above it is clear that disallowance under Section 40A(2) for payment being excessive or unreasonable can only be made when the payment is made to the specified persons under clause 40A(2)(b) and when Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market price of the goods, services or facilities for which the payment is made. In the instant case, admittedly, the concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the fair market value of the same. 9. So far as second question is concerned, since, it appears that the Tribunal did not appreciate corresponding receipts were already shown, and therefore, same is also answered in favour of the assessee. 10. In view of the above discussion and in view of the decisions of this Court, as referred to herein above, we are of the opinion that the present appeal deserves to be allowed. 11. In the result, this appeal is ALLOWED. We held that Tribunal was not justified in upholding the action of the assessing officer in disallowing the entire amount of labour charges, amounting to Rs. 22,22,976/-, paid to the female relatives of the directors of the appellant assessee u/s 40A(2)(b) of the Act and that the en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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