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2019 (11) TMI 62 - AT - Income TaxAddition of purchase expenses u/s.40A(3) - payments for purchases are made in cash - Contention of the assessee that provisions of Section 40A(3) of the Act have no application in as much as, the credit balance of the parties were transferred to the partners account and partners in turn settled the claims of the parties in cash - HELD THAT:- Since assessee firm has not paid cash, the provisions of Section 40A(3) of the Act have no application. We are afraid this submission of the assessee cannot be accepted for the reasons that undisputedly, the payees had received money in cash and thereby defeating the very purpose of enacting the provisions of Section 40A(3). As in the case of Attar Singh Gurmukh Singh vs. ITO [1991 (8) TMI 5 - SUPREME COURT] wherein it was decided that when there is direct payment to the payees in cash, the provisions of Section 40A(3) of the Act are attracted. what is not directly permitted cannot be indirectly permitted. Therefore, we do not find any reason to interfere with the orders of the lower authorities. Thus, ground of appeal No.2 filed by the assessee stands dismissed. Disallowance of commission paid to Balakrishnan Minor (HUF) u/s.40A(2) (b) - there was no proof of rendering any services by the Balakrishnan Minor (HUF) and secondly the services stated to have been rendered only in individual capacity - HELD THAT:- It is settled position of law that commission payment cannot be allowed as deduction in the absences of any evidence on record establishing rendition of services. Even before us, no material is shown establishing rendition of actual services by Balakrishnan Minor (HUF) and therefore commission payment cannot be allowed as deduction. Ground No.3 filed by the assessee is also stands dismissed.
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