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TMI Blog2012 (6) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... er expenditure incurred by assessee though payment is not exceeding Rs. 20,000/-but multiple or fragmented payment is made in a day or short span of time. In case, it exceeds to Rs.20,000/- (Twenty Thousand rupees), then whether it shall be lawful for the income tax department to disallow the benefits of section 40(3)(3A) of the Income Tax Act? 2. Whether fragmented payments made in a day more than Rs. 20,000/- will not be covered under provision of Section 40(3)(3A) of the Income Tax Act? 3. Assessee, the liquor contractor and is dealing in trading of country liquor. Assessee filed return on 30.10.2004 at Rs.1,10,120/- (One Lakh Ten Thousand and One Hundred Twenty rupees) along with audited balance-sheet and audit report in form 3-CB. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -allowance under section 40A(3) of the said amount was not justified. We, therefore, delete the said addition." Heard the learned counsel for the parties and perused the record. Sri A.N. Mahajan, learned standing counsel on behalf of the Department submits that in view of the latest amendment in Section 40A(3) of the Act, the order of the Tribunal cannot be allowed to stand. However, we find that section 40A(3) of the Act, as it then stood at the relevant point of time, provided that the amount exceeding Rs. 2,500 should not be paid except by way of cheque drawn on bank or by a crossed bank draft and, if it exceeds that amount, then 20% of the expenditure shall not be allowed as deduction. It does not say that the aggregate of the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143 ITR (St.) 67 Learned standing counsel for the Department could not place any decision contrary to the above. Only submission which he could make is that in view of the amendment in law, the view of the Tribunal cannot be allowed to stand. Obviously, the said amendment was not available during the relevant assessment year and the said amendment was not retrospective in nature. In view of the above, there is no legal infirmity in the order of the Tribunal. The question of law is, therefore, answered in the affirmative in favour of the assessee and against the Department. No order as to costs. 3. While assailing the impugned order, Sri Pushkar Baghel, learned counsel for the petitioner invited attention to the provision contained in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on shall be made where any payment in a sum exceeding [twenty] thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business [Expenses or payments not deductible in certain circumstances. 4. The plain reading of the provision (supra) reproduced, reveals that where the assessee incurred any expenditure in respect of payment is made after such date as may be specified by the Government of India by notification in official gazette (31.3.1969) in a sum extending Rs. 21,000/- other than crossed cheque drawn in Bank by crossed Bank Draft 20% su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee make payment at different time during the day and has no Idea totality of expenditure then he cannot be subjected to statutory restriction contained under section 40A (3) of the Act. The High Court held that Section 40A(3) of the Act, applies to the payment made to the parties at a time and not to aggregate payment made to the parties in the course of day as recorded in the cash-book. 9. The case of Aloo Supply Company (supra) has been followed by Division Bench of this Court in Ashok Iron & Steel Rolling Mills Ltd. The relevant portion of the judgment is reproduced as under:- "Heard the learned counsel for the parties and perused the record. Sri A.N. Mahajan, learned standing counsel on behalf of the Department submits that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that meaning which makes the provision workable and is nearest to the legislative intention , has to be adopted. The word 'sum' in section 40A(3), second proviso, of the Income-Tax Act, 1961, is used only to indicate an amount of money and does not refer to the totality of the expenditure. Against the said judgment of the Orissa High Court, a special appeal was preferred before the Apex Court and the said special appeal has been dismissed by the Apex Court as reported in (1983) 143 ITR (St.) 67 Learned standing counsel for the Department could not place any decision contrary to the above. Only submission which he could make is that in view of the amendment in law, the view of the Tribunal cannot be allowed to stand. Obviously, the said am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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