2026 (6) TMI 202

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....after referred to as 'Ld. CIT (A)' in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act' in short) for Assessment Year 2014-15. 2. The assessee has raised following grounds of appeal:- "1. The Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi has erred in law and in facts in confirming the action of the Ld. A.O. in making an addition /disallowance applying the provisions of Sec. 40(A)(2)(a) of the Act of Rs. 1,14,75,000/- in respect of investment made in shares without considering the submissions made by the appellant that no such expense has been claimed by the appellant and thus, the provisions of Sec. 40(A)(2)(a) are not applicable to the transaction under consideration. The ad....

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....e shares acquired was Rs. 10 per share and, therefore, the assessee had paid Rs. 170 per share in excess. According to the Assessing Officer, the assessee, being a newly incorporated company with no independent funds and having entered into a transaction with its associate concern, had made an excessive and unreasonable payment. He further held that the transaction, though shown as investment, was in substance a business transaction. Accordingly, invoking the provisions of section 40A(2)(a) read with section 40A(2)(b) of the Act, the Assessing Officer treated the excess payment of Rs. 1,14,75,000/- as excessive expenditure and added the same to the income of the assessee. 4. Aggrieved by the assessment order, the assessee preferred an....

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....s of business or profession". In the present case, the transaction relates to acquisition of capital assets, which has been duly reflected in the balance sheet as non-current investment and not routed through the Profit and Loss Account. It is also noted that the total expenditure claimed in the Profit and Loss Account during the year is only Rs. 65,732/- and the impugned amount does not form part of such expenditure. The Ld. AR further submitted that the shares continue to be held by the assessee and no sale has taken place during the year. Therefore, no income or loss has arisen from such investment. It was also contended that the Assessing Officer has not brought any material on record to establish the fair market value of the shares and....