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2016 (12) TMI 1240 - ITAT MUMBAIDisallowance u/s 40A(3) - splitting the payments in excess of ₹ 20,000 - expenditure paid in cash - Held that:- We are of the considered view that not only a bare perusal of the circular No. 1 of 2009, dt. 27th March, 2009 reveals that the same is an explanatory note as regards extension of the rigors of Sec. 40A(3) even to the cases where there is an attempt on the part of an assessee to circumvent the said statutory provision by splitting the payments in excess of ₹ 20,000/-(supra), into several cash payments, each below ₹ 20,000/-, and the interpretation arrived at by the Ld. A.R by digressing from the issue addressed by the aforesaid circular and rather divorcing certain terms from the text and reading the same in isolation, cannot be accepted. We are of the considered view that the interpretation pressed into service by the Ld. A.R to support his contention that genuine transactions would not fall within the gamut of Sec. 40A(3) not only fails for the aforesaid fallacious methodology of interpretation so adopted, but rather a perusal of the judgment of the Hon‟ble Supreme Court in the case of : Attar Singh Gurmukh Singh (1991 (8) TMI 5 - SUPREME Court ) interpreting the scope of Sec. 40A(3), had held -“Genuine and bona fide transactions are not taken out of the sweep of the section.”, therefore the aforesaid contention of the assessee would thus fail on the said count too. Thus in light of our aforesaid observations, the ground no.1 of the appeal is dismissed and the order of the CIT(A) to the extent sustaining the addition/disallowance of ₹ 13,11,455/- is upheld. - Decided against assessee Disallowance of loss on sale of fenders - Held that:- In the present case, now when the assessee had reflected the fenders as a capital asset in its "books of accounts", but however had claimed that the same were purchased as a tradable commodity in the normal course of its business of supplier of stores to ships, therefore a very heavy onus was cast on the assessee to irrebutably substantiate his contention, all the more when the said claim was found to be in absolute contradiction of the facts as emerged from its "books of accounts", and therein prove that the fenders were purchased as a tradable commodity in the course of its normal business as that of supplier of stores and were to be supplied pursuant to an order placed upon it by a customer, but by way of an inadvertent mistake had been reflected as a capital asset in the "Books of account". We however find that the assessee except for repeatedly raising an unsubstantiated claim had however absolutely failed to place on record any material which could go to fortify its contention. The assessee had neither before the lower authorities, nor before us, placed on record copy of any such order or correspondence pertaining to placement of any such order for supply of fenders by the customer. Thus the state of affairs prevailing in the case do not inspire much confidence, as a result whereof we are unable to subscribe to the hollow claim so raised by the assessee.Thus we are of the considered view that the regular and systematic purchase of fenders by the assessee in itself goes to dislodge the claim of the assessee that the same were purchased in the course of its normal business and were to be supplied pursuant to orders placed upon it by a customer. - Decided against assessee
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