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2022 (9) TMI 1021 - Income Tax
Disallowance u/s 40A(3) - payments otherwise than by way of account payee cheques/bank drafts in relation to the expenses incurred - where seller of agricultural land insisted on payment in cash? - HELD THAT:- No disallowances under section 40A(3) can be made where seller of agricultural land insisted on payment in cash. Thus, applying the legal principles enunciated in the judicial precedents cited before us, we hold that the disallowance made under section 40A(3) of the Act is unsustainable. Accordingly, we delete it. - Decided in favour of assessee.
Disallowance of provision of bad debts - HELD THAT:- The facts emanating on record indicate that the assessee had actually written off the amount in dispute in its books of account. As evident, the bad debt written off pertains to the debtor to whom maintenance services were provided and maintenance charge on account of such services were accounted in the books of account in past assessment years and were offered to tax. The apprehension of the AO appears to be unfounded. In any case of the matter, after amendment of section 36(1)(vii) w.e.f. 01.04.1989, the condition precedent for allowance of deduction is actual writing off of the bad debts in the books of account. This is the ratio laid down in case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] - That being the position in law, we do not find any deficiency in the decision of the learned Commissioner (Appeals). Accordingly, ground raised is dismissed.
Expenditure under the head ‘property maintenance’ and under the head Miscellaneous Expenses - HELD THAT:- Disallowance on purely ad-hoc basis without any valid reasoning. As could be seen from the facts on record, the assessee is engaged in three business segments viz. electricity supply, estate management services and real estate division. The maintenance division is known as Sunrise Management & Estate Services. As observed that the assessee has adopted this practice of raising bills in the name of Sunrise Management and Estate Services from past years and continuing with the same. As rightly observed by Commissioner (Appeals), all the details relating to the expenses were furnished before the AO and further, the payments were made through banking channel. In fact, the assessee has deducted tax at source wherever applicable.
It is also a fact on record that in the preceding assessment years, such expenditure incurred by the assessee have been accepted by the AO - AO has not pointed out any specific deficiency in the documentary evidences furnished by the assessee. Thus, ad-hoc disallowance made by the AO without any valid reason cannot be sustained. Accordingly, we uphold the decision of Commissioner (Appeals) by dismissing the ground.