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| The Tax Publishers2020 TaxPub(DT) 5092 (All-Trib) : (2021) 187 ITD 0230 INCOME TAX ACT, 1961
Section 40A(2)(b)
Rent paid to related party without bringing any comparable case, could not be held to be excessive or unreasonable and, therefore, no disallowance could be made under section 40A(2)(b).
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Business disallowance under section 40A(2)(b) - Excessive or unreasonable payment - Payment of godown/shop rent to related parties - No enquiry made by AO to determine fair market rent
Assessee claimed deduction of godown/shop rent paid to related parties. AO treated rent paid as excessive and thus made disallowance by invoking section 40A(2)(b).Held: When AO had not conducted any enquiry to determine fair market rent so as to hold that payment made by assessee on account godown/shop rent was excessive or unreasonable, disallowance made by the AO was contrary to the provisions of section 40A(2) and, therefore, disallowance could not be sustained especially when payment of rent was not found to be bogus or ingenuine.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14 & 2014-15
IN THE ITAT, ALLAHABAD BENCH
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