Disallowance of deduction for related party payments where expenditure exceeds fair market value and business need.

A person is not allowed a deduction for capital or revenue expenditure paid or payable to an associated person if the Assessing Officer considers it excessive or unreasonable. Disallowance may be made having regard to the fair market value of the goods, services or facilities, the legitimate needs of the payer's business, and the benefit derived by or accruing to the payer.

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