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2020 (2) TMI 254 - ITAT JAIPURAddition u/s 40A - payment towards electricity charges in cash to the Ajmer Vidyut Nigam Limited (AVVNL) exceeding permissible limits - HELD THAT:- There is no dispute regarding the identity of state electricity distribution company (AVVNL), the genuineness of the transaction in terms of electricity bills for consumption of electricity by the assessee, source of cash being the withdrawals from assessee’s own bank account and the test of business expediency has also been met as we have noted above. Further, as held by the Hon'ble Rajasthan High Court in case of Smt. Harshila Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] the consequences, which were to befall on account of non- observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) has been brought on the statute books has not been violated in the instant case. Therefore, being a case of genuine business transaction and test of business expediency been satisfied, no disallowance is called for by invoking the provisions of section 40A(3) of the Act. In the result, we hereby direct the deletion of disallowance so sustained by the Ld. CIT (A). - Decided in favour of assessee
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