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2018 (6) TMI 404 - AT - Income TaxDisallowance u/s. 40A(3) - making payments in cash against purchase of liquor for sale at the firm's allotted vends - commercial expediency - arguments of non practicality to make the payment through the banking channel on the basis of the dealership being temporary in nature in-as-much as the licence for the trade was issued to the appellant-firm only for a year, and that, as stated, not making the payment in cash would have caused unnecessary delay and additional financial burden. Held that:- We cannot help wondering as to how in the days of electronic payments could discount be insisted upon for payment only in cash, which is both risky and time consuming. A nominal advance of the payment being made, per cheque, equal to the payment to be made on a single day, avowedly not exceeding ₹ 20,000/-, would imply that payment to that extent stands received, which could then be repeated each day, entitling thus the purchaser to the discount on its daily purchase. The argument is devoid of business rationale and sense, as is the plea of the cash payments being made before the banking hours, i.e., opening of the bank (in the morning). Why, the assessee has also pleaded absence of bank account at Bathinda as among the reasons, which is plainly frivolous in-as-much as it is the assessee, operating as many as 5 vends thereat, who has to open a bank account; having already a bank account with Punjab & Sind Bank at Muktsar - the location of the sixth vend. We, therefore, are hardly impressed with the said pleas, besides finding them irrelevant. We find some merit in the assessee’s claim of each vend being managed separately, i.e., by one (or more) partner/s, with each vend maintaining separate accounts. If, therefore, each vend is maintaining separate books of account, having thus a separate account with the supplier, liable for payments thereto, i.e., against purchases made by it, and there is no interlacing of management, including purchase and sale; we discern a valid justification for not clubbing the payments made by each vend to the common supplier/s. This is as excise rules would be applicable vend-wise; each responsible for maintaining its’ stock, as well as the stock record - we find substantial basis for reckoning the payments for the purposes of u/s. 40A(3)/(3A) separately for each vend. Needless to add, this consideration would have no application where there is transfer of cash, stock, etc. from one vend to another, in which case there is a common link/management, including of cash, with the payments to the supplier being therefore monitored at the group level The matter, in view of the foregoing, is accordingly restored to the file of the Assessing Officer for factual verification and adjudication on the basis of the factual findings in light of our observations aforesaid - Decided partly in favour of revenue
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