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2013 (4) TMI 783 - AT - Income TaxDisallowance of 20% cash payment u/s 40A(3) made in respect of its stock-in-trade - Held that:- No purpose will be served in deferring disallowance of such expenditure, which is made in cash during the year under consideration. As per our considered view, giving such direction for deferring the disallowance to subsequent years will frustrate the purpose of Section 40A(3), which is meant for discarding cash payment made during the year in respect of trading goods. Furthermore, there will always be uncertainty as to the year in which the assessee come forward and claim such expenditure in its profit and loss account. In the instant case before us, even today, the assessee has not come forward to offer such expenditure in the profit and loss account, when more than 6 years have been passed. For the time being, even if it is presumed that the assessee will come forward in the subsequent year, but in that year, keeping in view the period of limitation, no disallowance could be agreed by the assessee in respect of cash payment made for expenditure incurred in the assessment year 2006-07. Furthermore, entries made in books of account is not so relevant for allowing or disallowing a claim of deduction which is necessarily to, be allowed as per provisions of Income-tax Act, 1961. Accordingly, we confirm the action of the CIT(A) for upholding the disallowance so made under Section 40A(3). - Decided against assessee.
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