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2017 (5) TMI 365 - AT - Income TaxDisallowance under the provisions of section 40A(3) - cash payment for purchase of land - Held that:- In a particular case where there exist a business expediency and other relevant factors and also the payments are genuine, then the Acts provide for immunity from disallowance of expenditure, if the assessee proves to the satisfaction of the assessing officer that there exists a business expediency in making the cash payments. In this case, the assessee has filed necessary evidences to prove that the impugned land has been acquired as an investment and subsequently converted into stock in trade of his business. Therefore, we are of the view that the A.O. was erred in disallowing cash payments by invoking provisions of section 40A(3) of the Act. Hence, we direct the A.O. to delete additions made towards cash payments u/s 40A(3) of the Act. - Decided in favour of assessee.
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