JUDGMENT : K.S. Jhaveri, J. 1. Since the common questions of law arises and are identical, all these appeals are heard and decided together by this common oral judgment. 2. The short facts of the case are that the assessee filed its return of income declaring total income of Rs. 87,52,058/- on 12/12/2006 for the assessment year 2006-2007. The said return of income was selected for scrutiny assessment and notice under Section 143(2) of the Income Tax Act was issued. In response to the notice, hearing was taken place and attended to by representatives of the assessee and submitted written as well as oral submissions. The AO by its assessment order determined the total taxable income of the assessee at Rs. 8,23,26,260/-. While passing the order of assessment, the AO mad addition by allowing Rs. 6,31,08,777/- on account of excessive and unreasonable payment made to the sister concern under Section 40A(2)(b) of the Act. The AO also made addition of Rs. 1,04,65,420/- by disallowing expenditure lacking business nexus. 2.1 Aggrieved by the order passed by the AO, the assessee preferred an appeal before the CIT(A) which came to be partly allowed confirming the addition made by the AO by disallowing Rs. 1,04,65,420/- on account of excessive and unreasonable payment made to the sister concern under Section 40A(2)(b) but deleted disallowance of expenditure of Rs. 1,04,65,420/- on account of lacking business nexus. 2.2 Aggrieved by the order of the CIT(A), both the revenue and assessee have preferred an appeal before the Tribunal and the Tribunal after hearing both the sides, by impugned order allowed the appeal of the assessee and dismissed the appeal of the revenue, which has given rise to the present group of appeals. 3. Tax Appeal No. 1984 of 2010 came to be admitted on the following questions of law: "(A) Whether the Tribunal below committed substantial error of law in deleting the addition of Rs. 1,04,65,420/- made by the Assessing Officer by totally overlooking the fact that sales promotion expenses has been increased in the relevant year by 351.54% in relation to the previous year whereas the net profit rate has fallen from 4.56% of the previous year to 4.2% of the present year. (B) Whether the Tribunal below committed substantial error of law in deleting the amount of Rs. (B) Whether the Tribunal below committed substantial error of law in deleting the amount of Rs. 1,04,65,420/- without taking into consideration the fact that there was no mathematical relation between alleged sales promotion expenditure and growth rate therein." 4. Tax Appeal No. 1985 of 2010 came to be admitted on the following questions of law: "Whether the Tribunal below committed substantial error of law in deleting the addition of Rs. 1,18,98,049/- made to the sister concern under section 40A(2)(b) of the Income Tax Act by totally misinterpreting the said provision." 5. Tax Appeal No. 1986 of 2010 came to be admitted on the following questions of law: "Whether the Tribunal below committed substantial error of law in deleting the addition of Rs. 1,04,65,420/- made to the sister concern under section 40A(2)(b) of the Income Tax Act by totally misinterpreting the said provision." 6. Tax Appeal No. 1064 of 2014 came to be admitted on the following questions of law: "(A) Whether the Income Tax Appellate Tribunal was justified in upholding deletion of disallowance of Rs. 9,34,64,731/- under section 40A(2)(a) of the Income Tax Act, 1961? (B) Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in upholding deletion of disallowance of sales promotion expenses of Rs. 1,90,31,082/-?" 7. Learned Counsel for the appellant has taken this Court to the order passed by the AO and CIT(A) and contended that both the authorities below has considered in detail the material placed before them. He has contended that the Tribunal committed an error in confirming the order of the CIT(A) deleting the disallowance of expenses which have no business nexus. He has contended that the AO during the assessment found that the there is disproportionate increase in the sale promotion expenses under the heads of 'advertisement expenses', 'discount and incentive expenses' and 'sale promotion expenses' by 351.54% over the immediate previous year despite the fact that the turnover has been increased very nominally by 15.54% during the year. He has also contended that when the assessee is claiming deduction of expenses, the onus of burden of proof is on the assessee to prove the genuineness of the expenses. He has contended that in the present case sale promotion expenses under various heads have not been incurred for the purpose of business but for extraneous purpose. He has also contended that when the assessee is claiming deduction of expenses, the onus of burden of proof is on the assessee to prove the genuineness of the expenses. He has contended that in the present case sale promotion expenses under various heads have not been incurred for the purpose of business but for extraneous purpose. He has also contended that both the Tribunal and CIT(A) have ignored such aspect of the matter while deleting the addition and therefore issues raised in these Tax Appeals may be answered in favour of the department. 8. On the other hand, Mr. Soparkar, learned Counsel for the assessee has contended that the payments for the expenses have been made through the account payees cheques/bank drafts. The vouchers were maintained and expenses were verifiable. He has also contended that the genuineness of the expenses cannot be doubted. 8.1 Learned Counsel for the assessee has relied upon the paragraph Nos. 10.1, 14 and 14.1 of the order passed by the tribunal and has contended that the tribunal has rightly come to the conclusion after considering the various pronouncements. Paragraph Nos. 14 and 14.1 reads thus: "10.1 In the instant case, we find that the AO analyzed the average tea places on purchase of tea from outside parties vis-à-vis purchase price from the sister concerns like Jivraj Tea Industries Ltd. & Surin Corporation and concluded that the assessee paid excessive purchase price to sister concerns. The yard stick adopted by the AO average purchase price of tea from the other parties. Now the tea has large varieties and its price depends upon number of factors depending upon its quality; quality will be better in ideal condition of humidity and height of the garden and tea plucked from fresh bushes as against tea grown at lower altitudes and plucked from old bushes. The tea from a garden at higher altitudes will fetch higher price as compared to tea grown in gardens at lower altitude. Fresh tea normally fetches higher prices as compared to old stock. Tea is generally sold in auction by various gardens and the market rates of a particular quality depends upon the best bidding. The price of dust is lower as compared to the price of leaf tea. In vie of variety of factors affecting tea trade, there can be no average price of tea. Tea is generally sold in auction by various gardens and the market rates of a particular quality depends upon the best bidding. The price of dust is lower as compared to the price of leaf tea. In vie of variety of factors affecting tea trade, there can be no average price of tea. The AO has compared average price of tea purchased from outside parties vis-à-vis purchase from sister concerns. No attempt has been made to ascertain the price prevailing in the market on the day when purchases are stated to have been made from the sister concerns, especially when the price prevailing on a particular day fluctuates even in respect of tea from the same garden and of the same grade. No finding has been recorded by the ld. CIT(A) on the plea on behalf of the assessee that purchases of tea from sister concerns have also been made at lower rates vis-à-vis purchases of Marghabhai Kishanbhai Patel & Co. v. CIT, 108 ITR 54 (Guj) held that the average price of earlier purchases cannot be taken as the basis of determining cost of subsequent purchases. Besides, the AO/the ld. CIT(A) have not analyzed the impact of transportation coast on purchase of tea from outside parties and have altogether ignored the plea on behalf of the assesses that heavy transportation cost was incurred on purchase of tea from the outside parties. The provisions of section 40A(2)(a) cannot have any application, unless it is first concluded that the expenditure was excessive or unreasonable, as held in the case of Upper India Steel Manufacturing And Engineering Co. Private Limited v. Commissioner of Income-tax, Lucknow, 117 ITR 569 (SC). In the case under consideration, there is nothing to suggest that the AO ever brought any material on record on this aspect nor even cited any comparable instances in respect of the fair market value of the tea purchased from a particular garden and of a specific garde on the date when purchases were made from sister concerns for which the payments has been made, before concluding that expenditure was excessive or unreasonable, especially when in the preceding years no such disallowance has even been attempted. It is the settled legal position that comparison has to be made among equals. The onus is no the Assessing Officer to establish that payments made by assessee were excessive or unreasonable. It is the settled legal position that comparison has to be made among equals. The onus is no the Assessing Officer to establish that payments made by assessee were excessive or unreasonable. No other material has been brought to our notice by the Revenue to establish the excessive-ness of the payments. 14. We have heard both the parties and gone through the facts of the case. Undisputedly, payments for the expenses have been made through account payee cheques/bank drafts and none of the parties is related to the assessee company or its directors. The Id. CIT(A) found that all the details and vouchers are maintained and expenses were verifiable. In nutshell the genuineness of the expenditure has not been doubted. Only ground for disallowance was that there was disproportionate increase in expenses vis-à-vis turnover the assessee. As pointed out by the ld. CIT(A) while referring to the decisions in the case of CIT v. Dhanrajigiri Raja Narsinhgiri, (1973) 91 ITR 544 (SC) and Voltamp Transformers Private Limited v. CIT, (1981) 129 ITR 105 (Guj), it is well settled that it is not open to the Revenue to prescribe what expenditure and in what circumstances an assessee should incur the expenditure. Every businessman knows his interest best. Considering the facts and circumstances of the case, especially when genuineness of the expenditure has not been doubted and there is no material before us so as to enable us to take a different view in the matter, we are not inclined to interfere with the findings of the ld. CIT(A). This view of ours is supported by the decision in the case of Sasson J. David And Co. Pvt. Limited (Supra), where in the Hon'ble Apex Court observed: "It has to be observed here that the expression "Wholly and exclusively" used in section 10(2)(xv) of the Act does not mean "necessarily". Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Pvt. Limited (Supra), where in the Hon'ble Apex Court observed: "It has to be observed here that the expression "Wholly and exclusively" used in section 10(2)(xv) of the Act does not mean "necessarily". Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such expenditure may be incurred voluntarily are without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction under s. 10(2)(xv) of the Act even though there was no compelling necessity to incur such expenditure it is relevant to refer at this stage to the legislative history of s. 37 of the I.T. Act 1961, which corresponds to s. 10(2)(xv) of the Act. An attempt was made in the I.T. Bill of 1961 to lay down the "necessity" of the expenditure as a condition for claiming deduction under s. 37. Section 37(1) in the Bill read expenditure.. laid out or expended wholly, necessarily and exclusively for the purposes of the business or profession shall be allowed... "The introduction of the word "necessarily" in the above section resulted in public protest. Consequently, when s. 37 was finally enacted into law, the word necessarily came to be dropped. The fact that some body other than the assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of deduction under section 10(2)(xv) of the Act if its satisfies otherwise the test laid down by law. This view is in accord with the following observations made by this Court in CIT v. Chandulal Keshavlal & Co., (1960) 3 SCR 38 at page 48; 38 ITR 601, 610 (SC). "Another fact that emerges from these case is that if the expense is incurred for fostering the business of another only or was made by way of distribution of profits or was wholly gratuitous or for some improper or oblique purpose outside the course of business then the expense is not deductable. In deciding whether a payment of money is a deductible expenditure one has to take into consideration questions of commercial expendency and the principles of ordinary commercial trading. In deciding whether a payment of money is a deductible expenditure one has to take into consideration questions of commercial expendency and the principles of ordinary commercial trading. If the payment of expenditure is incurred for the purpose of the trade of the assessee it does not matter that the payment may inure to the benefit of a third party (Usher's Whitshire Brewery Ltd. v. Bruce, (1914) 6 TC 399 (HL). Another test is whether the transaction is properly entered into as a part of the assessee's legitimate commercial undertaking in order to facilitate the carrying on its business; and it is immaterial that a third party also benefit hereby Eastern Investment Ltd. v. CIT, (1951) SCR 594; 20 ITR 1 (SC). But in every case it is a question of fact whether the expenditure was expended wholly and exclusively for the purpose of trade or business of the assessee. 14.1 In view of the foregoing, we do not find any merit in the ground Nos. 1 to 4 in the appeal of the Revenue, expenditure having been incurred for promoting the business and to earn profits." 8.2 Attention of this Court was also drawn to the decision in case of S.A. Builders v. CIT (Appeals), [2007] 288 ITR 1 (SC) and it was submitted that similar issue was considered by the Hon'ble Apex Court. Learned Counsel for the assessee has relied upon the following paragraphs: "34. Similarly, the view taken by the Bombay High Court in Phaltan Sugar Works Ltd. v. Commissioner of Wealth-Tax, (1995) 215 ITR 582 also does not appear to be correct. 35. We agree with the view taken by the Delhi High Court in CIT v. Dalmia Cement (Bhart) Ltd., (2002) 254 ITR 377 that once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize its profit. The income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. No businessman can be compelled to maximize its profit. The income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits. 36. We wish to make it clear that it is not our opinion that in every case interest on borrowed loan has to be allowed if the assessee advances it to a sister concern. It all depends on the facts and circumstances of the respective case. For instance, if the Directors of the sister concern utilize the amount advanced to it by the assessee for their personal benefit, obviously it cannot be said that such money was advanced as a measure of commercial expediency. However, money can be said to be advanced to a sister concern for commercial expediency in many other circumstances (which need not be enumerated here). However, where it is obvious that a holding company has a deep interest in its subsidiary, and hence if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the assessee would, in our opinion, ordinarily be entitled to deduction of interest on its borrowed loans. 37. In view of the above, we allow these appeals and set aside the impugned judgments of the High Court, the Tribunals and other authorities and remand the matter to the Tribunal for a fresh decision, in accordance with law and in the light of the observations made above. 38. We also make it clear that we are not setting aside the order of the Tribunal or other Income Tax authorities in relation to the other points dealt with by these authorities, except the point of deduction of interest on the borrowed funds." 8.3 After making the aforesaid submissions, learned Counsel for the assessee has submitted that the aforesaid questions may be answered in favour of the assessee and against the department. 9. 9. Having heard the learned Counsel for the parties and having gone through the order passed by the Tribunal which has discussed the issues in detail raised in these appeals, as well as the decision as relied upon in case of S.A. Builders Ltd., (supra), we are of the opinion that the tribunal has not committed any error of law. The expenses which had been incurred by the assessee were for the promotion of the product and being the consumer item, it has to be applied with different sale method. In the opinion of this Court, the tribunal has rightly held that both the authorities have committed serious error and therefore the view taken by the tribunal is just and proper. Accordingly, issues raised in Tax Appeal No. 1984 of 2010 is answered in favour of the assessee and against the department. 10. Now, so far as the issue raised in Tax Appeal Nos. 1985 and 1986 of 2010 regarding deleting the amount on account of unreasonable payment made to sister concern under Section 40A(2)(b) of the Act is concerned, the Tribunal has also discussed this issue in detail in its paragraph No. 101 as quoted herein above and therefore while adopting these reasons and without elaborate discussion, this issue is also answered in favour of the assessee and against the Department. 11. Now, so far as Tax Appeal No. 1064 of 2014 is concerned, the issues raised in this appeal have already been discussed and answered. Accordingly, the issues raised in this appeal is also answered in favour of the assessee and against the department.