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TMI Blog2012 (7) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case, the Ld.CIT(A)-I, Nashik, is justified in holding that the payment made u/s.40A(2)(b) is reasonable? 3. The appellant prays the order of the Assessing Officer may be restored. 4. The appellant prays to adduce such further evidence to substantiate his case. 2. Brief facts of the case are that the assessee is an individual. He filed return of income declaring total income of ₹ 46,03,590/- on 29.09.2008 which was scrutinized by the Assessing Officer. The assessee is engaged in the business of conducting Mangal Karyalayas under the name and style of Nandanwan Lawns, which is taken on rent from his father Shri Prakash Mate. The Assessing Officer examined the income and expenditure account in respect of Nandanwan Lawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable and made a disallowance of 50% amounting to ₹ 22,50,000/-. In appeal, the CIT(A) decided the issue in favour of the assessee. Same has been opposed before us. 3. The Ld. Departmental Representative submitted that the CIT(A) was not justified in deleting the addition of ₹ 22,50,000/- made by the Assessing Officer u/s.40A(2)(b) of the Act. The CIT(A) was also not justified in holding that payment made u/s.40A(2)(b) of the Act was reasonable. So order of the CIT(A) be set aside and that of the Assessing Officer be restored. On the other hand, the Ld. Authorised Representative supported the order of the CIT(A). 4. After going through the above submissions and material on record, we find that undisputed facts are that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement, it could not be said that rate, a little higher than seasonal market rate, was unjustified or amounts to diversion of profit specially when assessee as well as its subsidiary which was the seller are in the same tax bracket and pay same rate of tax was a fact which assumes importance. Admittedly, it was not a case of tax evasion in as much as if rate would have been less, the assessee s profit would have been more, but the profits of the seller would have been less and both being taxable at the same rate, there would be no difference in the aggregate tax payable by the assessee and its subsidiary. Accordingly, rate for purchase of goods from subsidiary were not found excessive and unreasonable. Accordingly, disallowance by invok ..... X X X X Extracts X X X X X X X X Extracts X X X X
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