Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 775 - ITAT JAIPURDisallowance u/s 40A(3) - cash payment made for purchase of land to farmers situated in rural area exceeding the prescribed threshold - HELD THAT:- In the instant case, where the assessee decided to pay token money to the sellers who are rural agriculturist to make them agree to sell their land, it is clearly a business decision taken by the assessee and the test of business expediency has been established. As held by the Hon’ble Supreme Court in case of Attar Singh Gurmukh Singh [1991 (8) TMI 5 - SUPREME COURT] that the terms of section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. The genuine and bonafide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the Assessing Officer the circumstances under which the payment in the manner prescribed in section 40A(3) was not practicable or would have caused genuine difficulty to the payee. As held 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 object for which the provisions have been enacted. Therefore the genuineness of the transaction and it being free from vice of any device of evasion of tax is relevant consideration for which section 40A(3) has been brought on the statute books and which has been satisfied in the instant case - no disallowance is called under section 40A(3) of the Act and the same is directed to be deleted. - Decided in favour of assessee.
|