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TMI Blog2012 (12) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 4,74,440/-.The case was selected for scrutiny and thereafter the assessment was framed u/s. 143(3) vide order dated 23-12- 2008 and the income was assessed at ₹ 9,05,677/- after making various additions. Assessee being aggrieved by the order of Assessing Officer carried the matter before CIT (A). CIT (A) vide order dated 27-2-2010 allowed the appeal of the assessee. Against the aforesaid order of CIT (A) the Revenue is now in appeal before us. The only effective ground of appeal raised by the Revenue read as under:- On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of ₹ 13,75,120/- as the assessee has failed to discharge its onus to prove the reasonableness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us evidences and data. Thus, the A.O. is not justified in making addition. Therefore, the addition is deleted. 5. Aggrieved by the order of CIT (A), the Revenue is now in appeal before us. Before us, the Ld. D.R. submitted that during the course of assessment proceedings, the assessee had submitted that there were no expenses which were covered by the provisions of Sec. 40A(2)(b). He further submitted that the assessee has not furnished the reasonableness of payments made to the parties covered u/s.40A(2)(b) and thus the assessee has failed to discharge its onus to prove the reasonableness of payments. He therefore urged that in view of the aforesaid facts the of A.O. be upheld. 6. On the other had the Ld. A.R. submitted that provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure is excessive or unreasonable having regard to (a) fair market value of the goods, services or facilities for which the payment is made; or (b) the legitimate needs of the business of the assessee; or (c) the benefits derived by or accruing to the assessee on receipt of such goods, services or facilities, then the A.O. shall not allow as a deduction so much of the expenditure as is so considered by the A.O. to be excessive or unreasonable. 9. Thus it becomes apparent that the A.O. is required to form an opinion having regard to the fair market value of the service rendered. The A.O. has to record a finding as to whether the expenditure is excessive or unreasonable in relation to the requirements prescribed. 9. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and the A.O. need not make any attempt to find out the prevailing market rate. Meaning thereby the Assessing Officer has not collected any information, as is apparent from the assessment order on the basis of which it could be said that the Assessing Officer has formed an opinion after collecting necessary information from the market to compare the prevalent market rate of the job work done by the said sister concern. Rather, the Assessing Officer was not sure about his action therefore he has used the terminology, appeared to be excessive . He had also not arrived at a exact figure of disallowance rather made the disallowance merely on an estimate basis . Even when the issue was carried before the first appellate authority the same app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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