The Tax Publishers2020 TaxPub(DT) 3340 (Pune-Trib)

INCOME TAX ACT, 1961

Section 40A(2)(b)

Disallowance made under section 40A(2)(b) on account of purchase from sister concern, without bringing on record some material to indicate that purchase rate was excessive in comparison with some comparable case or the market rate of goods purchased, could not be sustained.

Business disallowance under section 40A(2)(b) - Excessive or unreasonable payment - Purchases from sister concern alleged to be made from sister concern - No comparable case brought on record

AO alleged that assessee made purchases at excessive rate from its sister concern. Accordingly, AO invoked section 40A(2)(b) and made disallowance, however, without making reference to comparable cases. Held: To invoke section 40A(2)(b), it was incumbent upon AO to bring on record some material to indicate that purchase rate was excessive in comparison with some comparable case or the market rate of goods purchased. As nothing has been done in this regard disallowance made by AO could not be sustained.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :



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