2021 (12) TMI 22

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....allowance of depreciation made by the Assessing Officer had been confirmed by the CIT(A) in view of the fact that the hotel operation of the appellant was suspended during the year under consideration as per the Auditors Report? (b) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in deleting the disallowance of interest claim of 9% amounting to Rs. 1,60,22,465/- in respect of the fully convertible debentures issued to M/s. Cox and Kings India Ltd. without appreciating the fact that Shri Ajay Ajit Peter Kerkar, who is the son of Shri Ajit B. Kerkar, Chairman of the assessee company, was the Director of M/s. Cox and Kings India Ltd. during the relevant period and therefore, the pro....

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....(b) of sub Section 2 of Section 40A, the Assessing Officer has to form an opinion that the expenditure was excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of respondent or the benefit derived by or accruing to him therefrom. 5. In this case, respondent had issued debentures to Cox and Kings India Ltd. amounting to Rs. 18 Crores during the Assessment Year 2005-2006 for a period of 89 days. Due to ongoing litigation, respondent's hotel was not functional and respondent had huge financial liabilities. In view of this, respondent was unable to redeem the debentures and requested Cox and Kings India Ltd. to....

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....016 no disallowance, on account of any expenditure being excessive or unreasonable having regard to the fair market value, shall be made in respect of a specified domestic transaction referred to in Section 92BA, if such transaction is at arm's length price as defined in clause (ii) of Section 92F. As provided under Section 40A (2) (a), the Assessing Officer was duty bound to form a personal opinion, after having regard to the fair market value of the goods, services or facilities for which payment is made, that such expenditure is excessive or unreasonable. As stated earlier, there is no material placed to indicate what would have been the fair market value of interest that would have been payable on the debentures and why such payment ....