| |
| The Tax Publishers2020 TaxPub(DT) 1999 (Chen-Trib) INCOME TAX ACT, 1961
Section 40A(2)
Where assessee had made payment related party then merely in this ground no disallowance can be made under section 40A(2). Since AO had not made out the case based on evidence to come to a conclusion that transaction was a sham transaction, thus disallowance was liable to be deleted.
|
Business disallowance under section 40A(2)(b) - Excessive or unreasonable payment - Cost of purchase of film rights under section 40A(2) -
Assessee was engaged in business of film production, real estates. While making the assessment, AO disallowed cost of purchase of film rights under section 40A(2) holding, inter alia, that assessee booked huge loss which would offset the capital gain made by assessee in the property transaction as a device to avoid tax payment on the capital gain by setting off the loss, etc. Held: The reasonableness of consideration can be evaluated from the following aspects vis., based on the population, based on the theatres as the medium though the film has to be exhibited. Any rational approach to evaluate whether consideration paid by assessee, whether the same was excessive or unreasonable had to confirm that consideration paid was completely reasonable and well within acceptable norms of any yardstick that can be benchmarked in this regard. CIT(A) held that AO had not made out the case based on evidence to come to a conclusion that transaction was a sham transaction. Thus, disallowance was liable to be deleted.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 55
 SUBSCRIBE FOR FULL CONTENT
|