Скачать или смотреть Whether addition u/s 40A(2)(b) is justified without establishing that how payments were excessive?

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[2025] 482 ITR 149 (Delhi High Court)

Commissioner of Income Tax (International Taxation)
V.
Technip Energies Italy S.P.A.

Yashwant Varma and Purushaindra Kumar Kaurav, JJ.

28.02.2024

Playlist: 40A(2)(b)

40A: Expenses or payments not deductible in certain circumstances.

A.Y: 2019-20/Assessee

Question: Whether addition u/s 40A(2)(b) is justified without establishing that how payments were excessive?

1. That on the facts the tribunal had held that the assessee had discharged its onus with reference to the expenses, that in terms of provisions of section 40A(2)(a), the A.O. to form an opinion based on cogent material that the expenses or payments made by assessee to the related parties were excessive and unreasonable having regard to the fair market value of goods and services.

2. The A.O. had not established in what manner he had formed the opinion or that the expenses with reference to related parties were excessive and unreasonable having regard to the fair market value and had not referred to any comparable case of similar nature of expenses to show that the payments or expenses made by assessee were excessive and unreasonable and more than fair market value.

3. The A.O. had failed to discharge the burden cast upon him u/s 40A(2)(a).

4. For the first time at the final assessment stage, the A.O. had invoked the provisions of section 40A(2)(b) without providing any opportunity to assessee, that neither at the draft assessment stage, not before the DRP was the applicability of section 40A(2)(b) ever an issue.

5. That at the final assessment stage, the A.O. had not found any anomalies in the documents furnished by the assessee and that only for the purpose of circumventing, the directions of the DRP and to repeat the addition, had gone in a different tangent by invoking section 40A(2)(b) which was unjustified.

6. It was held that the tribunal did not err in holding that the expenses incurred by the assessee were not excessive under the provisions of section 40A(2)(b).

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