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2021 (12) TMI 95 - AT - Income TaxAddition u/s 40A(3) - payment made in cash by the assessee to its group companies - Revenue’s argument in support of Section 40A(3) cash payment disallowance is that the operation thereof ought to be excluded merely because the twin entities herein are group concerns - HELD THAT:- There is hardly any dispute about the basic fact that both the payer and payee(s) herein are group entities only. Overwhelming genuine expenditure payments deserve to be accepted even if they have been made in cash. We further take note of the hon'ble apex court’s landmark decision in Attar Singh Gurmukh Singh [1991 (8) TMI 5 - SUPREME COURT] that this statutory provision comes into play so as to prevent unaccounted cash from being ploughed in the system. Case law Harshita Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] and Anupam Tele Services [2014 (2) TMI 30 - GUJARAT HIGH COURT] held that such overwhelming genuine payments ought not to be disallowed in light of the restrictive interpretation of rule 6DD of the Income Tax Rules which is not self-exhaustive. We therefore quote hon'ble apex court’s yet another landmark decision in CIT Vs. K.Y.Pilliah [1966 (10) TMI 35 - SUPREME COURT] to express our complete agreement with the CIT(A)’s conclusion deleting the impugned Section 40A(3) disallowance in entirety without delving much deeper in the relevant facts herein. - Decided against revenue.
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