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2010 (5) TMI 513 - AT - Income TaxDisallowance u/s 40A(3) - Freight Charges - The Assessing Officer had noticed from the LRs that each payment has made is more than Rs. 20,000 in cash in violation of provisions of section 40A(3) of the Act - Accordingly, the Assessing Officer has disallowed 20 per cent of the total freight - Held that: - since the assessee had not claimed any expenditure in respect of payment to lorry owners, either as lorry hire charges or under any other head of account, the provisions of section 40A(3) cannot be made applicable by artificially holding that the said payments are debitable to profit and loss a/c. In view of the above, after considering the totality of the facts and circumstances of the case, the disallowance made under section 40A(3) of the Act for the assessment year under consideration cannot be sustained. Hence the addition made on this account is to be deleted. - since the assessee had not claimed any expenditure in respect of payment to lorry owners, either as lorry hire charges or under any other head of account, the provisions of section 40A(3) cannot be made applicable by artificially holding that the said payments are debitable to profit and loss a/c. In view of the above, after considering the totality of the facts and circumstances of the case, the disallowance made under section 40A(3) of the Act for the assessment year under consideration cannot be sustained. Hence the addition made on this account is to be deleted. Turnover for the purpose of Sec. 44AB - Income on the basis of TDS certificate - where the receipts consisted on two accounts on account of assessee’s own trucks as well as on account of trucks owned by others but hired by the assessee, the whole of the receipts computed on the basis of TDS certificates could not be attributed as receipt on account of plying of trucks on assessee’s own account and the total receipts computed on the basis of TDS certificates could not be considered as assessee’s own receipts for the purpose of section 44AB of the Income-tax Act. The other issue raised in this appeal is with regard to disallowance of telephone expenses of Rs. 25,840 - this issue was not considered by the CIT(A) in his order - matter remanded back for this issue.
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