2011 (7) TMI 539

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....Rs. 2,55,83,821/-. During the course of assessment proceedings, on verification of the details filed by the assessee, the Assessing Officer noticed that the assessee has paid hire charges to the following persons:   (i) Mr. Atul M. Thakkar, Director Rs. 35,98,430 (ii) Mr. Sunil M. Thakkar, Director Rs. 26,96,205 (iii) Mr. Lopa S. Thakkar, Director Rs. 13,46,135 Total Rs. 76,40,770 The assessee was asked to furnish list of payments made to persons covered under section 40A(2)(b) along with evidence to prove that the payments were not unreasonable as per section 40A(2)(b). Subsequently, the Assessing Officer also asked the assessee to furnish the details of payments made to the persons covered u/s.40A(2)(b) along with justificat....

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.... charges paid to outside suppliers of tankers for the same quantity of product transported and the same place of destination. The assessee also produced records and the bills before the Assessing Officer during the assessment proceedings to show the comparative prices. Sample copies of such invoices issued by outside suppliers of tankers and mentioned in the comparative chart submitted before the Assessing Officer during the assessment proceedings have also been submitted before the Ld. CIT(A) during the appellate proceedings the assessee also submitted that it had stated before the Assessing Officer that the payments made to the directors are prevailing market price and are not aimed at diverting any profits to the associated persons and t....

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.... the other parties, which was provided by the assessee's letter dated 16.11.2009 to the AO with the comparative chart annexed to the said letter. Accordingly, the assessee submitted that the said addition be deleted as the same is based on wild guess, conjectures and surmises.   4. The learned CIT(A) after going through the comparative chart submitted by the assessee extracted at page 7 of the appellate order observed that some times the Directors were paid Rs. 10/- per kilo litre for more than the other transporters. The difference is not very abnormal and accordingly he held that 5% disallowance is sufficient and, therefore, he directed the AO to disallow 5% instead of 10%.   5. Being aggrieved by the order of the learned CIT(....

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....curred by the assessee may be disallowed by the AO if he considers the same to be excessive or unreasonable having regard to :   (a) the fair market value of the goods/services or facilities for which the payment is made; or   (b) the legitimate business needs of the assessee's business or profession; or   (c) the benefit derived by or accruing to the assessee from the payment. Undoubtedly, the AO has the authority as well as the jurisdiction to evaluate the excessive or unreasonable expenses incurred by the assessee in favour of a relative of the assessee. In the case before us there is no dispute that the assessee had filed a comparative chart showing the payments of transport charges paid by the assessee as compared wit....

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....PCL SINNER 10 KL 600 6000 Shahid Roadline 19 13.09.06 MH06K 2237 BPCL PALGHAR 10 KL 418 4180 Shahid Roadline 20 29.09.06 MH04CA 2445 BPCL PALGHAR 9.24 MT 460 4250 A.M. Thakkar 21 31.11.06 MH04CA 2631 BPCL PALGHAR 9.14 MT 450 4235 S.M. Thakkar 22 04.10.06 MH27C 775 BPCL VASHI 10 KL 288 2880 Shahid Roadline 23 20.10.06 MH04CA 2632 BPCL VASHI 10 KL 300 3000 A.M. Thakkar 24 11.11.06 MH04CA 2444 BPCL VASHI 10 KL 300 3000 S.M. Thakkar 25 07.06.06 MH04CA 2444 BPCL WADA 10 KL 370 3700 Lopa S. Thakkar 26 11.11.06 MH18M 4438 BPCL WADA 10 KL 360 3600 Shahid Roadline 27 12.10.06 MH04CA 2632 BPCL WADA 10 KL 370 3700 A.M. Thakkar 28 03.12.06 MH04CA 3239 BPCL VAPI ....