Dismissing the appeal of the assessee the Court held that, in present case, as it was found by taxing authorities that payment made by assessee to three sub-contractors out of 21 work contracts given by it was to relatives of partners of firm, as such same was disallowed in view of Clause (b) of Section 40A(2). Accordingly the order of Tribunal confirming the disallowance of 20% of expenditure is affirmed. (AY. 2008-09, 2009-10)
Akrati Promoters And Developers v. DCIT (2019) 183 DTR 204 / (2020) 268 Taxman 83 (All.)(HC)
S. 40A(2) : Expenses or payments not deductible–Excessive or unreasonable-Payment made by the assessee firm to three sub-contractors out of 21 work contracts given by it was to the relatives of the partners of the firm-20% disallowance is held to be justified. [S. 37(1), 40A(2)(b)]