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2017 (6) TMI 918 - AT - Income TaxDisallowance u/s 40A(3) - payment of expenditure in cash - CIT-A relied on sub rule (j) of 6DD for deleting disallowance - claim of the assessee that it was on account of business expediency that such payments were made - Held that:- We find that the said rule apply for payments made on a day on which banks are closed. Nevertheless there is much strength in the contention of the ld. Authorised Representative that exceptional situations mentioned in Rule 6DD are not exhaustive. Hon’ble Delhi High Court in the case of Basu Distributor vs. ITO [2006 (12) TMI 104 - DELHI High Court] has held that there could be exceptional and unavoidable circumstances that may not find a place in Rule 6DD which would still be a reasonable ground for not applying the rigours of Sec. 40A(3) of the Act. Ld. Commissioner of Income Tax (Appeals) had given a clear finding that assessee could demonstrate business expediency which justified the payments being made in cash. We cannot find any lacuna in this finding of the ld. Commissioner of Income Tax (Appeals). For deposits made in Karur Vysa Bank Ltd, a clear finding has been given by the CIT(A) that it was proceeds of the deposits made by the assessee in the year 2005-06. Ld. Commissioner of Income Tax (Appeals) has also noted that assessee had accounted accrued interest of B77,188/-. Revenue has also not raised ground citing violation of Rule 6DD. We are therefore of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in deleting both the additions. - Decided in favour of assessee.
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