Section 40A(2)(b)

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Disallowance U/s. 40A(2)(b) not justified without proving that expense incurred by assessee is excessive

ITO Vs Media Satellite & Telecom Ltd, (ITAT Delhi) - ITO Vs Media Satellite & Telecom Ltd, (ITAT Delhi) In this cse AO could not show that the expenditure incurred by the assessee is excessive or unreasonable providing market comparative price with respect to the fair market value of the goods. The ld AO could not show that without offering the di...

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Section 40A(2)(b): Interest Rate on Permanent Loan cannot be compared with Rate on Temporary Loan

CIT Vs Shiv Agrevo Ltd. (Rajasthan High Court) - CIT Vs  Shiv Agrevo Ltd. (Rajasthan High Court) The prevailing market rates of interest for the loans of permanent nature were between 18 per cent, to 24 per cent, whereas the cases compared by AO pertained to the loans of temporary nature and that the assessee had advanced money for the purpose of...

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Remuneration paid to Management Graduates related to business is allowable

M/s. Hinduja Group India Ltd. Vs ACIT (ITAT Mumbai) - These are the appeals filed by assessee against the order of CIT(A)-12, Mumbai dated 30/05/2014 for A.Y. 2008-09 and A.Y. 2009-10 in the matter of order passed under Section 143(3) of the Income Tax Act (hereinafter the Act). In the A.Y. 2010-11, Revenue is in appeal before us with respect to disall...

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Salary to partners as per deed and Income Tax Act cannot be disallowed

DCIT Vs M/s. Eurotex Chemicals (ITAT Ahemdabad) - Salary to the partner is being regulated by the provisions of section 40(b) of the Income Tax Act. It is to be paid in accordance with the provision stipulated in the deed which should be in commensurate with the provisions of section 40(b) of the Income Tax Act. On such salary payment, provisions o...

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Section 14A applies also to strategic investments in subsidiaries; No estoppel against a statute

DCIT Vs. The Saraswat Co-operative Bank Limited (ITAT Mumbai) - Section 14A applies also to strategic investments in subsidiaries.Section 40A(2) is not applicable to co-operative societies. No disallowance under section 40A(2) should be made if the tax effect is neutral i.e. the recipient is paying tax at the same rate as the payer...

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Recent Posts in "Section 40A(2)(b)"

Disallowance U/s. 40A(2)(b) not justified without proving that expense incurred by assessee is excessive

ITO Vs Media Satellite & Telecom Ltd, (ITAT Delhi)

ITO Vs Media Satellite & Telecom Ltd, (ITAT Delhi) In this cse AO could not show that the expenditure incurred by the assessee is excessive or unreasonable providing market comparative price with respect to the fair market value of the goods. The ld AO could not show that without offering the discount the goods are […]...

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Section 40A(2)(b): Interest Rate on Permanent Loan cannot be compared with Rate on Temporary Loan

CIT Vs Shiv Agrevo Ltd. (Rajasthan High Court)

CIT Vs  Shiv Agrevo Ltd. (Rajasthan High Court) The prevailing market rates of interest for the loans of permanent nature were between 18 per cent, to 24 per cent, whereas the cases compared by AO pertained to the loans of temporary nature and that the assessee had advanced money for the purpose of business needs. […]...

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Remuneration paid to Management Graduates related to business is allowable

M/s. Hinduja Group India Ltd. Vs ACIT (ITAT Mumbai)

These are the appeals filed by assessee against the order of CIT(A)-12, Mumbai dated 30/05/2014 for A.Y. 2008-09 and A.Y. 2009-10 in the matter of order passed under Section 143(3) of the Income Tax Act (hereinafter the Act). In the A.Y. 2010-11, Revenue is in appeal before us with respect to disallowance of similar expenses....

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Salary to partners as per deed and Income Tax Act cannot be disallowed

DCIT Vs M/s. Eurotex Chemicals (ITAT Ahemdabad)

Salary to the partner is being regulated by the provisions of section 40(b) of the Income Tax Act. It is to be paid in accordance with the provision stipulated in the deed which should be in commensurate with the provisions of section 40(b) of the Income Tax Act. On such salary payment, provisions of section 40 A(2) cannot be invoked....

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Section 14A applies also to strategic investments in subsidiaries; No estoppel against a statute

DCIT Vs. The Saraswat Co-operative Bank Limited (ITAT Mumbai)

Section 14A applies also to strategic investments in subsidiaries.Section 40A(2) is not applicable to co-operative societies. No disallowance under section 40A(2) should be made if the tax effect is neutral i.e. the recipient is paying tax at the same rate as the payer...

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Disallowance u/s 40A(2) of Commission paid to relatives cannot be made without proper enquiry

ACIT Vs Sh. Saurabh Batra (ITAT Delhi)

AO made the disallowance by invoking the provisions of section 40A(2) of the Act, however nothing was brought on record on the basis of the comparative analysis to substantiate that the commission paid to the related parties was higher than the commission paid to unrelated parties....

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S. 40A(2)(b) Loan taken from relatives cannot be compared with bank loan

ACIT Vs. M/s. Raj Steel Industries (ITAT Ahmedabad)

It was held that loan taken from the relatives cannot be compared with bank loan because loan from the relatives are without security, while loan from the bank is secured. Tribunal has held in the case of Omkarmal Gaurishanker –Vs- ITO reported in 92 TTJ (Ahd.) 223 that interest paid to relatives @24% is reasonable....

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S. 40A(2)(b) Interest on loan @ 12% paid to related party can’t be considered as excessive

DCIT Vs. M/s. Sarjan Realities Ltd. (ITAT Ahmedabad)

CIT(A) found force in the submission of the assessee that the interest at the rate of 12% was also taken as reasonable in the Income Tax Act under the provisions of section 40A(b)(iv) for the purpose of calculating interest to the partners. The CIT(A) also followed the decision of the Tribunal in the case of ACIT Vs. M/s.Raj Steel Industr...

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S. 40A(2)(b) Interest on unsecured loan from relatives @ 18% is reasonable

Vipul Y. Mehta Vs. ACIT (ITAT Ahmedabad)

We have heard both the parties and perused the material placed before us. We find that during the year under consideration, the assessee claimed travelling expenses amounting to Rs.4,29,01 1/-. The AO disallowed 50% of the claim because the expenses included the expenses of assessee’ s wife also....

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