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2013 (6) TMI 740 - AT - Income TaxDisallowance made under section 40(a)(ia) - Held that:- In this case and in respect of other payments another issue to be looked into is whether these payments are contractual payments or instant/adhoc payments against various services obtained. As no details are available on record, the issue of disallowance under section 40(a)(ia) is remitted back to the Assessing Officer for considering the issue afresh in the light of the relevant decisions. Wherever the payments were made without deducting any tax, where TDS is liable, then of course the Assessing Officer shall invoke the provisions of section 40(a)(ia). But, in cases even if no TDS was made if the payments do not come within the purview of TDS, no disallowance can be made. Likewise, in the case of shortfall in deduction, again there cannot be any disallowance. Accordingly, this issue is remitted back to the Assessing Officer for reconsideration and deciding the issue in accordance with law. Development expenses - Held that:- Commissioner of Income-tax(Appeals) is justified in deleting the addition made by the Assessing Officer. The addition has been made by the Assessing Officer on general observations and on adhoc basis. He has not applied his mind in analyzing the real working pattern of the assessee and the profit rate disclosed by the assessee and he has not made any comparative study. Disallowance under section 40A(3) - Held that:- Usually the land owners will not expect cheque or banking instruments as part of consideration and they insist that money should be paid before signing the documents before the Sub-Registrar. An assessee cannot swim against that inevitable practice in a particular line of transaction. It is not possible for the assessee to purchase land from the villagers by giving cheques and drafts when the villagers are insisting for cash payments. Therefore, it is to be seen that it is only in such circumstances where the assessee could not make payment through banking instruments that it had made the payments in cash and that was for reasons beyond its control. Rule 6DD applies in such circumstances. Where it is impossible to purchase land otherwise than by making cash, it is not proper to say that the situation is not covered by Rule 6DD.In the facts and circumstances of the case we delete the disallowance confirmed by the Commissioner of Income-tax(Appeals). The addition is accordingly deleted.
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