2022 (3) TMI 146 - AT - Income Tax

Disallowance u/s 40A(3) - whether payment would fall under Rule 6DD(k) of I.T. Rules? - HELD THAT - Cash exceeding twenty thousand rupees on account of repairs and maintenance which includes payment on 12.10.2012 towards body making charges and towards altinator repairing works on 08.01.2013. However, going through the material facts and circumstances of the case, we find force in the contention of the assessee that the alleged amount was not paid in cash by the assessee but was paid by the driver acting as an agent of the assessee. Keeping in view all the facts and circumstances of the case as well as the exception provided under Rule 6DD(k) of the IT Rules and Relying on the decision of the coordinate bench in the case of M/s. Pramod Kumar Singh 2012 (6) TMI 914 - ITAT KOLKATA , we are of the view that the disallowance made by the AO is not sustainable and, therefore, we set aside the orders of the Ld. CIT(A) and allow the ground raised by assessee challenging the disallowance u/s 40A(3) - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing the appeal before the Tribunal.
2. Disallowance of repair expenses under section 40A(3) of the Income Tax Act, 1961.

Analysis:
1. Delay in Filing the Appeal:
The appeal was filed with a delay of 100 days, and the assessee sought condonation for the delay. The Tribunal, after considering the reasons provided, condoned the delay as it found a sufficient cause for the delay. The delay was thus condoned, allowing the appeal to proceed.

2. Disallowance of Repair Expenses:
The assessee contested the disallowance of repair expenses under section 40A(3) of the Income Tax Act, 1961. The AO disallowed expenses of &8377; 69,500 paid in cash, citing a contravention of the said section. The assessee argued that the payments were made by the driver acting as an agent, falling under the exception provided in Rule 6DD(k) of the IT Rules. The assessee presented ledger accounts and bills to support the genuineness of the transactions.

3. Arguments and Decision:
The assessee, being a transporter, explained that the expenses were incurred in cash due to technical glitches during transit when banking facilities were unavailable. The Tribunal agreed with the assessee's contentions, finding that the expenses were not directly paid by the assessee but by the driver as an agent. Relying on a previous decision and considering Rule 6DD(k) of the IT Rules, the Tribunal held that the disallowance made by the AO was not sustainable. Consequently, the Tribunal set aside the orders of the Ld. CIT(A) and allowed the appeal, directing the disallowance of &8377; 69,500 under section 40A(3) of the Act to be removed.

4. Conclusion:
The Tribunal allowed the appeal of the assessee, emphasizing that the disallowance of repair expenses was not justified as the payments were made by the driver acting as an agent, falling under the exception provided in Rule 6DD(k) of the IT Rules. The decision was made after a thorough analysis of the facts and circumstances of the case, ensuring compliance with the relevant legal provisions.

This detailed analysis highlights the key issues, arguments presented, and the Tribunal's decision in the legal judgment.