Section 40A(2)(b)

Disallowance u/s 40(a)(ia), 40A & 43B vis a vis income declared u/s 44AD & 44ADA & 44E

Income Tax - The issue under consideration in this write up is whether disallowance u/s 40(a)(ia), 40A & 43B of Income Tax Act, 1961 are attracted in case of an eligible assessee declaring income under presumptive taxation scheme contained in section 44AD, 44ADA & 44AE. Section 44AD, 44ADA & 44AE starts with a non-obstante clause reading a...

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Related Party Transactions – Section 40A(2) of Income Tax Act,1961

Income Tax - Introduction Section 40A(2) of Income Tax Act, 1961 deals with payments to relatives and associated persons. It provides that where the assessee incurs any expenditure in respect of which payment is to be made to a specified person and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard...

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In Revision proceedings CIT cannot travel beyond reasons given by him in SCN

PCIT Vs . Universal Music India Pvt. Ltd. (Bombay High Court) - PCIT Vs . Universal Music India Pvt. Ltd. (Bombay High Court) Issues (a) Whether on the facts, in the circumstances of the case and as per law, the Hon’ble ITAT has erred in holding that in the revision proceedings the CIT cannot travel beyond the reasons given by him for revision in the show-caus...

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Section 263 Revision order cannot be passed on ground not forming part of CIT Notice

PCIT Vs Universal Music India Pvt. Ltd. (Bombay High Court) - PCIT Vs Universal Music India Pvt. Ltd. (Bombay High Court) Notice under Section 263 was issued by CIT on two issues, namely, (a) disallowance of Fringe Benefit Tax (FBT) paid of Rs.10,72,532/- included in miscellaneous expenses and not allowed by the Assessing Officer and (b) provision of Rs.1,40,9...

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Section 40A(2)(b) not applies to loan given at lower interest rate for business purpose to related parties

Heena Parag Chheda Vs ACIT (ITAT Mumbai) - ITAT held that lower interest received on loan given to related party for business purpose cannot be subjected to provisions of section 40A(2)(b) of the Act. ...

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

Adityaram Properties (P) Ltd. Vs CIT (Madras High Court) - 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 asse...

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No section 40A disallowance on Cash Payment for fish or fish product

CIT Vs Ayshwarya Sea Food Pvt. Ltd. (Madras High Court) - CIT Vs Ayshwarya Sea Food Pvt. Ltd. (Madras High Court) on facts, the Commissioner of Income Tax (Appeals) and the Tribunal held that the assessee had purchased shrimp products from a supplier at Nellore and the explanation given by them at the first instance before the Assessing Officer is that the...

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CBDT notifies more modes of e-payments; 6DD limit reduced to ₹ 10000

Notification No. 08/2020-Income-Tax [G.S.R. 56(E)] - (29/01/2020) - Notification No. 8/2020-Income-Tax- CBDT has notified Other electronic modes by inserting New Income TAx Rule 6ABBA. It also amended marginal heading of rule 6DD and in rule 6DD for the words ‘account payee bank draft, exceeds twenty thousand rupees’, the words, figures and letters ̵...

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

In Revision proceedings CIT cannot travel beyond reasons given by him in SCN

PCIT Vs . Universal Music India Pvt. Ltd. (Bombay High Court)

PCIT Vs . Universal Music India Pvt. Ltd. (Bombay High Court) Issues (a) Whether on the facts, in the circumstances of the case and as per law, the Hon’ble ITAT has erred in holding that in the revision proceedings the CIT cannot travel beyond the reasons given by him for revision in the show-cause notice […]...

Read More

Section 263 Revision order cannot be passed on ground not forming part of CIT Notice

PCIT Vs Universal Music India Pvt. Ltd. (Bombay High Court)

PCIT Vs Universal Music India Pvt. Ltd. (Bombay High Court) Notice under Section 263 was issued by CIT on two issues, namely, (a) disallowance of Fringe Benefit Tax (FBT) paid of Rs.10,72,532/- included in miscellaneous expenses and not allowed by the Assessing Officer and (b) provision of Rs.1,40,98,685/- in respect of slow moving and ab...

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Section 40A(2)(b) not applies to loan given at lower interest rate for business purpose to related parties

Heena Parag Chheda Vs ACIT (ITAT Mumbai)

ITAT held that lower interest received on loan given to related party for business purpose cannot be subjected to provisions of section 40A(2)(b) of the Act. ...

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Disallowance u/s 40(a)(ia), 40A & 43B vis a vis income declared u/s 44AD & 44ADA & 44E

The issue under consideration in this write up is whether disallowance u/s 40(a)(ia), 40A & 43B of Income Tax Act, 1961 are attracted in case of an eligible assessee declaring income under presumptive taxation scheme contained in section 44AD, 44ADA & 44AE. Section 44AD, 44ADA & 44AE starts with a non-obstante clause reading a...

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Posted Under: Income Tax |

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

Adityaram Properties (P) Ltd. Vs CIT (Madras High Court)

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 […]...

Read More

No section 40A disallowance on Cash Payment for fish or fish product

CIT Vs Ayshwarya Sea Food Pvt. Ltd. (Madras High Court)

CIT Vs Ayshwarya Sea Food Pvt. Ltd. (Madras High Court) on facts, the Commissioner of Income Tax (Appeals) and the Tribunal held that the assessee had purchased shrimp products from a supplier at Nellore and the explanation given by them at the first instance before the Assessing Officer is that they are doing shrimp feed […]...

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Section 40A(2)(b) disallowance without proving that payments are over & above market rates are not valid

DCIT Vs M/s Interarch Building Products (P) Ltd. (ITAT Delhi)

DCIT Vs M/s Interarch Building Products (P) Ltd. (ITAT Delhi) The relevant part of the order of the ld. CIT (A) on this issue pertaining to payments made to Mr . Arvind Nanda, with regard to the vehicle purchase, payment made to M/s Intertec on account of job work and the rental payments has been […]...

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Related Party Transactions – Section 40A(2) of Income Tax Act,1961

Introduction Section 40A(2) of Income Tax Act, 1961 deals with payments to relatives and associated persons. It provides that where the assessee incurs any expenditure in respect of which payment is to be made to a specified person and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard...

Read More
Posted Under: Income Tax |

No section 40A(2) disallowance for Payment Made to Sister-In-Law

Rajesh Bajaj Vs DCIT (ITAT Allahabad)

Rajesh Bajaj Vs DCIT (ITAT Allahabad) The ld. counsel for the assessee has contended that Alka Bajaj and Preeti Bajaj are sister-in-law of the assessee and therefore do not fall in the definition of relative as provided u/s 2(41). This fact is not disputed by the Revenue and therefore, the payment to these two persons […]...

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Section 40A(2)(b) Addition allowed against Expense only & Not against Income

KEC Delco Dutsan (JV) Vs ITO (ITAT Delhi)

The issue under consideration is whether the addition made u/s 40A(2)(b) in case of estimation of income without doubting expenses incurred by assessee is justified in law?...

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