2014 (2) TMI 30 - GUJARAT HIGH COURT

Disallowance u/s 40A(3) - payment in case for purchase of recharge vouchers from Tata Teleservices Limited - Held that:- The payments between the assessee and the Tata Teleservices Limited were genuine - The Tata Teleservices Limited had insisted that such payments be made in cash, which Tata Teleservices Limited in turn assured and deposited the amount in a bank account.

In the facts of the present case, rigors of section 40A(3) of the Act must be lifted. - if the assessee had not made cash payment and relied on cheque payments alone, it would have received the recharge vouchers delayed by 4/5 days and thereby severely affecting its business operations.

Relying upon the decision in Smt. Harshila Chordia vs. Income Tax Officer [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] - The exceptions contained in Rule 6DD are not exhaustive and that the said rule must be interpreted liberally - The guideline laid down in the aforesaid judgement should be applied only to cash payments made by the assessee to the Tata Teleservices Limited and not to the other two agencies viz., Rajvi Enterprise and R.D Infocom - Decided in favour of assessee.