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TMI Blog2015 (9) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... er rate when compared to others - ITAT deleted the addition - Whether the finding of the Tribunal that the disallowance made under Section 40A(2)(b) is not attracted especially when the assessee had supplied its entire product to its sister concerns at exorbitant price thus bring down the profit of the assessee company? - Held that:- In this case, the Tribunal found that the only reason as to why the Assessing Officer came to a conclusion about the excessive or unreasonable nature of the expenditure was on the basis that the net profit amounted to only 0.13% of a massive turnover of about ₹ 103 crores. On such a premise, the conclusion that the expenses incurred were excessive or unreasonable could not have been arrived at. This is wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee filed its return of income electronically on 25.10.2007 for the assessment year 2007-2008. The return of income was selected for scrutiny through CASS and a notice under Section 143(2) was issued. 4. Subsequently, a notice under Section 142(1) was issued on 05.11.2009 calling for details in proof of the claim of expenditure made under depreciation. The assessee appeared and produced the details along with books of accounts. Since the Department was not satisfied, yet another notice was issued and a substantial portion of the records were thereafter produced. 5. The Income Tax Officer invoked the provisions of Section 40A(2)(b) on the ground that on a massive turnover of more than ₹ 103 crores, the assessee had shown a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the fair market value of the goods, he may order that so much of the expenditure, which is excessive or unreasonable shall not be allowed as a deduction. But, in this case, the Tribunal found that the only reason as to why the Assessing Officer came to a conclusion about the excessive or unreasonable nature of the expenditure was on the basis that the net profit amounted to only 0.13% of a massive turnover of about ₹ 103 crores. On such a premise, the conclusion that the expenses incurred were excessive or unreasonable could not have been arrived at. This is why, the Tribunal pointed out there are no materials to come to the conclusion that any particular item of expenditure was expensive or unreasonable. 9. The appeals do n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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