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2023 (6) TMI 661 - AT - Income TaxRevision u/s 263 - Cash payments towards purchase of capital goods - Violation of the provisions of section 40A(3) - HELD THAT:- The provisions of section 40A(3) of the Act will not apply to repayment of loans or payment towards the purchase price of capital assets such as, ‘plant and machinery’ not for resale. In light of the Circular No. 34 dated 05.05.1970 issued by the CBDT though the ld. PCIT in his order mentioned that he has perused the record, ledger account filed during the assessment proceedings, but had he appreciated this ledger account in true perspective, he would have come to know that all the payments have been made for purchase of capital assets on which subsequently, depreciation was claimed as is evident from the depreciation chart. PCIT himself could have examined the impugned transactions and if he had done so, he would have come to know that the payments have been made for purchase of capital goods and disallowance could not have been made u/s 40A(3) of the Act as per the CBDT Circular - Thus we set aside the order of the PCIT and restore that of the AO framed u/s 143(3) of the Act. Decided in favour of assessee.
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