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2021 (9) TMI 16 - AT - Income TaxDisallowance u/s 40A(3) for making cash payments - proof of business expediency - CIT-A deleted addition - HELD THAT:- The assessee was bound to make payments on daily basis since no credit sales were allowed by the sole supply agency M/s. Verka Milk Agency of the M/s. Hoshiarpur Distt. Co-operative Milk Producer Union Ltd. The product was released only upon making full payment for the purchase. AO has not disbelieved the business expediency, practical difficulty in making payment in cash to the said Milk Agency. A certificate has also been produced from the General Manager, Verka, Hoshiarpur that the assessee was a cash carry dealer for supplying Verka Milk and fresh milk products in Palampur and adjoining areas. Assessee has also explained that the milk was to be lifted daily and the payments were to be collected in the evening which were to be made to the Verka Agency in the morning itself and further the Verka Milk Agency did not provide milk on credit basis and further the payment was made to the Union of Producers of milk. Considering the above practical aspects, factors and circumstances and business expediency, in our view, the ld. CIT(A) was justified in deleting the disallowance made by the AO. No merit in the appeal of the Revenue and the same is, accordingly, dismissed.
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