- These expenses are incurred for goods, services or facilities.
- Payment has been made to a relative or a person with substantial interest as defined above.
- Such expenses are excessive or unreasonable. They are not in line with fair market value. Or they may not be a legitimate need of your business & profession. Or when you have incurred these expenses and they result in a benefit to you. Do note that an Assessing Officer can disallow expenses when they are not in sync with the needs of your business, even though these may have been paid as per the market value.
|To a relative||Mr. A purchases goods from his brother.|
|Relative of a director||X, Y and Z are directors in ABC Ltd. ABC ltd hires Mrs. X and ABC Ltd makes her a payment.|
|Company in which Relative has a substantial interest||Mrs. A holds 20% equity in K Ltd and A purchases from K Ltd.|