The payment made to the three sister concerns is not out of its own discretion exercised in favour of these sister concerns but one made due to obligation arising out of agreement. The expenditure of Rs. 2,19,42,019 to the three sister concerns of the assessee was revenue neutral as far as the group was concerned because one of the group entities had claimed the sum of Rs. 2,19,42,019 as business expenditure and the recipients of that sum which were also group companies had offered it, in the aggregate, as income. The Commissioner (Appeals) was correct to hold that adding it in the hands of the assessee would make it a case of double addition. The expenditure of Rs. 2,19,42,019 claimed as business expenditure by the assessee is justified.(AY.2014-15)
Dy. CIT v. Ramprastha Properties P. Ltd. (2024)112 ITR 74 (SN)(Delhi)(Trib)
S. 37(1):Business expenditure-Diversion of income by overriding title-Payment made to sister concerns not out of its own discretion but made due to obligation arising out of agreement-Claim revenue neutral because assessee claimed sum as business expenditure and recipients of that sum had offered it, in aggregate, as income-Adding it in hands of assessee would be double addition-Expenditure allowable. [S. 4]