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2012 (12) TMI 1028 - AT - Income TaxDisallowance u/s 40A(3) - assessee made the payment in cash which was to be made through cheque, therefore, there is a contravention to the provisions of Section 40A(3) - advance given to the farmers for acquisition of land - Held that:- As advances paid to the land owners for purchasing the land have not resulted in any stock in trade/work in progress for the year under consideration, therefore, on that particular date, it would not qualify for disallowance as expenses or payment within the meaning of Section 40A(1) read with Section 40A(3) - in such a situation, we are in agreement with the argument of the learned counsel for the assessee that the claim of expenditure/payment has to form part of the profit & loss account in the first place before the question of its disallowance arises. We are also in agreement with the finding of the learned CIT(A) that the advance given to the farmers for acquisition of land does not form part of stock in trade as on 31.3.2007. Therefore, the provision of Section 40A(3) would not apply. - Decided against revenue
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