Held, that the Assessing Officer had erred by not opining as to what, according to him, was the fair market value of the service, which was being rendered by the related persons, before treating the payments made to them as excessive. The Commissioner (Appeals) allowed the Assessing Officer’s mistake to be perpetrated. Both of them had fundamentally erred in not appreciating the mandate of section 40A (2)(b) of the Act. Payment allowable. (AY. 2014-15)
ACIT v. Praveen Sushil Kanda (2022)98 ITR 345 (Raipur)(Trib)
S. 40A(2) : Expenses or payments not deductible-Excessive or unreasonable Salaries to related parties-Assessing Officer failed to give fair market value to show excessiveness-Invocation fundamentally wrong-Payment allowable.