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2016 (9) TMI 445 - AT - Income TaxDisallowance of Expenses u/s.40(A)(3) - cash payments made to Electricity Company for the supply of Electricity. - Held that:- The payment of Electricity was the purpose of business, the payee to whom the assessee has made the payment has not been doubted by the AO; meaning thereby that the genuineness of payment and identity of the payee are not in doubt. In such a situation, we find that the Hon’ble Jurisdictional High Court in the case of Anupam Tele Services vs. ITO reported at (2014 (2) TMI 30 - GUJARAT HIGH COURT ) has held that the paramount consideration of section 40A(3) is to curb and reduce the possibilities of black money transactions and section does not eliminate considerations of business expediencies. Before us, Revenue has not placed any contrary binding decision. In view of the aforesaid facts and after placing reliance on the aforesaid decision of Hon’ble Gujarat High Court, we are of the view that in the present case the expenditure cannot be disallowed. Thus, this ground of assessee is allowed. Disallowance made u/s.40(a)(ia) - Held that:- The issue in the present case is with respect to disallowance of expenses u/s.40(a)(ia) of the Act on account of non-deduction of TDS. Before us also, apart from the oral submissions, assessee has also not placed any material on record to demonstrate that the recipients of the amounts have considered the amounts received from the assessee as their income. We find that there is no finding of the lower authorities to the effect that the payment made by the assessee have been considered by the respective payees as their income. Second proviso to section 40(a)(ia) has retrospective effect from 1st April-2005 and in the absence of any material on record which could show that the payees have already offered the amounts received from assessee as their income, we are of the view that the issue needs to be restored back to the file of ld.CIT(A) to decide the issue afresh in the light of our aforesaid discussion and decide the issue afresh in accordance with law.
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