Section 40A(2)(b) not invocable for Expense on Land purchase from directors based on prudent commercial decision

CIT Vs. Adityaram Properties (P) Ltd. (Madras High Court) The sole reason for which the Assessing Officer invoked Section 40A(2)(b) of the Act is for the reason that the Directors of the company were paid Rs.3 Lakhs per cent for the purchase of the land, whereas, the lands have been sold by the assessee to about 41 purchasers with an average selling price at Rs.1.36 Lakhs per cent of land, and therefore, the expenditure incurred by the Directors is exorbitant and accordingly, Section 40A(2)(b) of the Act would stand attracted. The CIT(A), while considering the correctness of the said finding, ...