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2018 (7) TMI 2011 - AT - Income TaxAddition u/s 40A - expenditure incurred in cash beyond the limits prescribed - whether assessee case did not fall in any of the exclusionary clauses specified in Rule 6DD of the Income Tax Rules,1962 ? - HELD THAT:- Contention of the Revenue is unacceptable in view of the various judicial pronouncements on the issue reiterating time and again that despite the exclusion of Rule 6DD(j) from the Rules, the assessee can still escape the disallowance u/s 40A(3) by demonstrating business expediency. In fact, in the latest decision in the case of M/s A.K. Daga Royal Arts Vs. ITO [2018 (6) TMI 1240 - ITAT JAIPUR] has after considering various judicial decisions on the issue, reiterated this view holding that Rule 6DD is not exhaustive and the mere fact that the transaction did not fall under Rule 6DD would not mean that the disallowance per force was to be made Contention of the Revenue that the assessee can derive no benefit from the decision of the Hon'ble Jurisdictional High Court in the case of Gurdas Garg [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT] in which stated that the order was rendered on reading pre-amended provisions of Rule 6DD which included sub clause(j), merits no consideration and the same is, therefore, dismissed. Even otherwise, we find, that despite the categorical observation of the jurisdictional high court that the parties are free to take appropriate action since the decision has not been rendered considering the exclusion of Rule 6DD(j),nothing was brought to our notice regarding any action taken by the Revenue against the said order by way of review petition filed or any other manner. It therefore stands to reason that the decision of the jurisdictional high court has been accepted as being applicable in the post amendment scenario of the Rules. We hold that the disallowance u/s 40A(3)( of the Act could not have been made for the reason that the business expediency was not covered in the circumstances enumerated in Rule 6DD of the Income Tax Rules, 1962. Alternate contention of the Revenue that the assessee was unable to prove business expediency, we are unable to agree with the same also. The assessee had contended that the land owners from whom land was purchased by the assessee and cash paid in lieu thereof, were all females and were in urgent need of funds and insisted the assessee to pay the consideration in cash and it was in these circumstances that the assessee made the payment in cash in excess of the limits specified u/s 40A(3) of the Act. The fact that the sellers of the land were females is confirmed by the copies of agreement to sell, which we find has not been controverted by the Revenue also. It is quite normal for females to insist on payment in cash considering the socio-economic background of the females in our country. Thus, we find no reason to doubt the business expediency for incurring the transaction in cash and this contention of the Revenue is also dismissed.
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