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2014 (6) TMI 245 - AT - Income TaxDisallowance u/s 40A(3) of the Act – Cash payment for business purpose – Held that:- Rule 6DD of the Rules clearly lays down the conditions or exceptions under which the rigor of the provisions of section 40A(3) of the Act may be relaxed and there is no discretion on either of the parties to extend the condition or relax the condition at will - Even the existence, demand or necessity or business expediency does not fall under the provisions of Rule 6DD of the Rules - it cannot be said that the assessee has immunity from the provisions of section 40A(3) of the act - the lower authorities have rightly invoked the provisions of section 40A(3) of the Act and made the disallowance – Decided against Assessee. Disallowance of 50% of business expenses - Subscription & Donations – Held that:- The assessee has debited a sum under the head “Subscription & Donations” - the payment was made keeping in view the specific nature of business of the assessee, which involves buying and selling of land which is scattered over various areas – there is different from other stock in trade which can safely be stored, according to assessee the said payment would constitute necessary expenditure u/s 37 of the Act – the assessee has made the payment to different persons to safeguard its business assets, the payments are allowable - the AO has disallowed 50% of this expenditure and allowed 50% - The AO made disallowance on ad-hoc basis without any reasons - CIT(A) has also confirmed the same – the expenditure is required keeping in view the specific nature of the business of assessee – Decided in favour of Assessee.
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