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2021 (4) TMI 1352 - AT - Income TaxDisallowance u/s 40A(3) - cash payments towards purchase of agricultural lands and vacant site - addition made as said payments are not covered by any exception laid down in rule 6DD - HELD THAT:- From the facts narrated in the report of the ITI, it is clear that there is business expediency in the said cash payments and the sellers are agriculturists and have insisted on cash payments. As further mentioned in the remand report that the sellers have specifically stated that cheques are not reliable and that the reasons why they have insisted upon cash payments. Assessee could not have carried the business but or the cash payments for purchase of lands which were initially acquired as an investment and then after obtaining necessary land conversation , these lands were introduced as stock in trade and then put to sale. In the remand report, it was finally submitted that cash purchases are inevitable and thus prove the business expediency in this case. Thus addition as cash payment made towards purchase of agricultural lands, which was added by the AO u/sec. 40A(3) is liable to be set aside. Consequently, the addition stands deleted. Assessee has not insisted on the confirmation of addition qua cash payment made towards purchase of vacant site, hence the affirmation of the said disallowance by the Ld. CIT(A) does not warrant any interference. - Decided partly in favour of assessee.
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