Income Tax : Dive into critical tax regulations and provisions, from related party payments to cash disallowance, and learn how they impact you...
Income Tax : Understand nuances of claiming tax deductions on payments to relatives in business. Learn how Section 40A(2) of Income Tax Act, 19...
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 at...
Income Tax : Introduction Section 40A(2) of Income Tax Act, 1961 deals with payments to relatives and associated persons. It provides that wher...
Income Tax : ITAT Delhi dismisses DCIT's appeal against DLF Urban Pvt. Ltd. TPO failed to apply industry filter for ALP of interest, resulting ...
Income Tax : Explore the intricacies of Section 40A(2)(b) with insights from the M S Hostel Vs DCIT case. Learn why salary disallowance require...
Income Tax : ITAT Mumbai held that compensation received by the assessee in out of court settlement for unilaterally terminating certain obliga...
Income Tax : ITAT Mumbai held that rate of interest @18% paid to related party towards unsecured loan is reasonable as rate of interest charged...
Income Tax : Trinity Global Enterprises Ltd. vs. ITO: No disallowance under 40A(2) for supervision and risk management charges. Detailed analys...
Income Tax : Notification No. 8/2020-Income-Tax- CBDT has notified Other electronic modes by inserting New Income TAx Rule 6ABBA. It also amend...
Further, the remuneration paid to managing director in the previous year cannot be a criterion for invoking the provisions of section 40A(2) of the Act as the assessee’s turnover stood at ₹ 283 lakhs as compared to ₹ 99 lakhs in immediately previous year. This has resulted into rise of 185% in turnover.
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 […]
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. […]
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.
Sharp Designers and Engineers India Pvt. Ltd. (Formerly Khinvasara Investments Pvt. Ltd.) Vs ACIT (ITAT Pune) AO had not brought any comparables from market to make out that the case that impugned payment was excessive or unreasonable within the meaning of section 40A(2)(b) and based his conclusion merely on low profitability of recipient firm was […]
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.
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
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.
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.
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 Industries and Vipul Y. Mehta Vs. ACIT (supra) where the rate of interest at 18% to 24% was considered to be reasonable.
