| COURT: | Supreme Court |
| CORAM: | A.K. Sikri J., M. R. Shah J, S. Abdul Nazeer J |
| SECTION(S): | 37(1) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | business expenditure, sharing of profit |
| COUNSEL: | - |
| DATE: | March 5, 2019 (Date of pronouncement) |
| DATE: | March 9, 2019 (Date of publication) |
| AY: | - |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 37(1)/40A(2) Business expenditure vs. sharing of profit: The AO has to take into account the manner in which the business works, the modalities and manner in which SAP/additional purchase price/final price are decided and determine what amount forms part of the profit. Whatever is the profit component is sharing of profit/distribution of profit and the rest is deductible as expenditure | |
Merely because the higher price is paid to both, members and non-members, qua the members, still the question would remain with respect to the distribution of profit/sharing of the profit. So far as the non-members are concerned, the same can be dealt with and/or considered applying Section 40A (2) of the Act, i.e., the assessing officer on the material on record has to determine whether the amount paid is excessive or unreasonable or not
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