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2017 (4) TMI 1066 - HC - Income TaxAddition u/s 40A(3) - addition on account of payment made in cash More than ₹ 20,000/- - Held that:- The chart of the payments in respect of expenditure incurred by the assessee/ appellant in the aforesaid relevant year as contained in the assessment order itself reveals that all cash transactions are either of ₹ 20,000/- or less though there may be multiple transactions in favour of one and the same party in a single day the aggregate of which exceeds ₹ 20,000/-. However, as in the said assessment year or prior to 1.4.2009 there was no restriction in making cash payment to a single party on the same day of various amounts aggregating to more than ₹ 20,000/- in cash, the same were allowable as deduction towards expenditure under Section 40 A (3) of the Act. Accordingly, the tribunal committed an error of law in confirming the additions of ₹ 1,28,400/- on account of payment made in cash by taking the aggregate of transactions made to one party in a single day to be over ₹ 20,000/-. - Decided in favour of assessee Disallowing the expenses on account of after sale services and advertisement u/s 37 (1) - no agreement for the reimbursement of the said expenses to the supplier or manufacturer - Held that:- The assessee/appellant is only a distributor. The advertisement expenses and after sale services are generally provided to the customers by the manufacturer or supplier through service centres. The cost thereof is realized by the manufacturer/supplier from the distributor irrespective of the fact as to whether any after sale services are actually availed by the customer or provided by the service centre. The payment of charges for after sale services to the manufacturer/ supplier is not linked with the actual after sale services. Therefore, the cost of after sale services in any case is payable to the supplier/manufacturer. We are of the view that the expenses for advertisement and after sale services alleged to have been reimbursed by the assessee/appellant to the manufacturer/distributor as has been allowed in the past by the tribunal were allowable under Section 37 (1) of the Act in the relevant year also.- Decided in favour of assessee
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