ITAT Upholds Deletion of Additions Under Sections 13 and 40A(2)(a) for Related-Party Service Payments

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....The ITAT upheld the order of the CIT(A) deleting the addition made by the AO under section 13(1)(c) read with sections 13(2)(c), 13(2)(g), and 13(2)(h) of the Act, and invoked section 40A(2)(a) for alleged excessive payments to related parties. The appellant society, operating numerous educational institutions, had entered into service contracts with related companies. The AO disallowed payments as excessive without adducing comparable third-party service evidence or industrial benchmarks. The Tribunal held that mere related-party transactions do not ipso facto render payments excessive; the AO's adhoc disallowance was based on suspicion and lacked evidentiary basis. The payments were found commensurate with services rendered. Consequently,.........