TaxTMI 
TaxTMI 
2014 (1) TMI 760
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....eals are decided and disposed of by this common judgment and order. TAX APPEAL NO. 1012 OF 2013 2.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned ITAT dated 30.04.2013 in ITA No. 3698/AHD/2008 for AY 200506, the revenue has preferred the present Tax Appeal to consider the following substantial question of law. "Whether on the facts and circumstances of the case and as per law, the Hon'ble ITAT is right in upholding the decision of learned CIT(A) of deleting the addition made by the AO of Rs. 15,00,000/made on account of payments made U/s. 40A(2) of the IT Act?" TAX APPEAL NO. 1010 OF 2013 3.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned I....
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....or scrutiny assessment. Notice under Section 143(2) and 142(1) of the Act along with questioners were issued. That the assessee claimed deduction under Section 40A(2)(b) of the Act of Rs. 1.50 crore paid to the persons specified under Section 40A(2)(b) of the Act viz M/s. Pollucon Engineers, the proprietor of which is wife of Shri Anand Vashi, Director of the assessee company with respect to supply of labour for operating and maintenance work. That by the office letter dated 27.10.2006, the assessee was requested to justify the said claim. The assessee, vide its reply dated 15.11.2006 submitted that the business of the proprietor was looked after with the help of Engineers and other employees. The business was conducted from 26, Jivan Vikas....
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....er learned ITAT has dismissed the said appeal confirming the deletion of 10% disallowance made by the Assessing Officer. 5.4. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned ITAT, the revenue has preferred present Tax Appeals for AY 2005-06, 2006-07 and 2007-08. 6.0. With respect to assessment year 2006-07 and 2007-08 similar disallowance was made by the Assessing Officer with respect to payment made to M/s. Pollucon Engineers and the learned CIT(A) has deleted such disallowance and the same has been confirmed by the learned ITAT by impugned common judgment and order, which are subject matter of Tax Appeal No. 1010 of 2013 ( for AY 2006-07) and Tax Appeal No. 1009 of 2013 (for AY 2007-08). 7.....
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....s. Pollucon Engineers. Therefore, it is requested to allow / admit the present Tax Appeals. 8.0. Heard. Shri Sudhir Mehta, learned advocate for the revenue and perused the the respective assessment orders as well as orders passed by the CIT(A) as well as impugned common judgment and order passed by the learned ITAT. 9.0. At the outset, it is required to be noted that Assessing Officer directed to make disallowance of 10% of the payment made under Section 40A(2)(b) of the Act to M/s. Pollucon Engineers and added to the total income of the assessee on adhoc basis and solely on the ground that as M/s. Pollucon Engineers whom the payment was made under Section 40A(2)(b) of the Act was a sister concern run by the wife of the Director of the as....
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....ding out the portion of disallowance he shall have to find out the fair market value of the services and this would presuppose that services are commonly available for which market value can be known. Thereafter, the AO shall have to evaluate the legitimate needs of the business at a point of time when the services were rendered and this would involve in inquiry as a businessman because in times of dire need services are obtained even at higher cost, the ultimate aim being to earn profit or to maintain the business relations. According to the ITAT, the AO shall have to find out what benefit is derived by the assessee and this would not necessarily confine to the year in question but shall have to take overall picture depending upon the fact....
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....iness requirement of the assessee and that lady is also subject to tax at the maximum rate. Hence, it is pleaded that there was no intention to save the tax. It has also been pleaded that there was no motive to divert the income because the assessee is entitled for the claim of 100% deduction on the income u/s 80IA(4). Thus, the totality of the circumstances demonstrates that there was no justification on the part of the AO to make such an adhoc addition. Resultantly, we hereby confirm the findings of the CIT(A) and dismiss this ground of the Revenue for the years under consideration." 12. We are in complete agreement with the reasoning and observations made by the learned CIT(A) confirmed by the learned ITAT. In absence of nay material be....