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2018 (9) TMI 777 - AT - Income TaxDisallowance of electricity payment paid to Jodhpur Vidyut Vitran Nigam Limited u/s 40A(3) - payment in cash exceeding specified limits - business expediency of making cash payments - Held that:- The assessee has entered into an agreement with a Government Hospital in Bikaner whereby it operates the MRI and CT Scan machines. The nature of such activities therefore demand a continuous supply of electricity and the assessee cannot risk the life of the patients especially those admitted in emergency cases by not operating these machines for want of electricity. Thus there was business expediency of making cash payments so that there is no disruption in supply of electricity required to operate the MRI and CT scan machines. It is not in all cases that the payments have been made in cash, rather the assessee has made cheque payments as well during the year. Therefore, it is in only those cases where the cheque payments couldn’t be arranged nearing the due date of payment that the payments have been made in cash. Therefore, being a case of genuine business transaction and test of business expediency been satisfied, no disallowance is called for by invoking the provisions of section 40A(3) of the Act. In the result, we hereby direct the deletion of disallowance so sustained by the ld CIT(A) - Decided in favour of assessee Disallowance of Freight & labour expenses and shop expenses - AO observed that expenses are not fully supported by bills vouchers - Held that:- The nature of these expenses are such that pakka bill is not possible. The expenses are reasonable considering the turnover of ₹ 1,98,00,164/-. The AO has not pointed out any specific expense which is not supported by vouchers. The shop expenses pertain to tea, refreshment, etc. which is reasonable. Hence, lump sum disallowance out of these expenses is uncalled for & be deleted. We find merit in the contention so raised by the ld AR and the adhoc disallowance so sustained by the ld CIT(A) is hereby deleted. - decided in favour of assessee
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