IKEA Trading India Pvt. Ltd. v. Dy.CIT (2020) 83 ITR 415 / (2021) 186 ITD 473 (Delhi)(Trib.)

S. 40A(2) : Expenses or payments not deductible-Excessive or unreasonable-Salary paid to Directors-Failure of the Assessing Officer to substantiate-Deletion of addition is held to be valid.

Tribunal held, that a plain reading of section 40A(2)(b) showed that the onus had been cast upon the Assessing Officer to bring on record comparable cases to demonstrate that the transactions of the assessee with the related parties were unreasonable and excessive. Admittedly, the Assessing Officer had failed to bring such comparable case on record. The payees were also assessed to tax at the same rate of tax. The Central Board of Direct Tax Circular No. 6-P dated July 6, 1968 stated that no disallowance was to be made under section 40A(2) in respect of the payments made to relatives and sister concerns where there was no attempt to evade tax. There was no infirmity in the order of the Commissioner (Appeals). (AY. 2004-05)