TMI Blog2016 (6) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... er not being deposited thus requiring cash payments in respect of these 21 transactions. Further, it is noted that these cash payments of ₹ 74.51 lacs constitute only a small percentage of total payments towards purchase of land totalling to ₹ 236.90 crores during the year under consideration and thus constitute an exception rather than a norm. In our view, the need for cash payments on Sundays/after banking hours and test of business expediency has been satisfactorily fulfilled in the instant case and the second proviso to section 40A(3) read with Rule 6DD which provides relaxation from the rigour of disallowance under section 40A(3) is clearly attracted. Further it is noted that the assessee has been in this line of business and in the past under similar circumstances, cash payments have been made to the farmers for purchase of the land and the Co-ordinate Bench vide its order dated 28.03.2014 has deleted the disallowance in A.Y. 2006-07, 2007-08 and 2008-09. Thus we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the disallowance - Decided in favour of assessee - ITA No. 416 /JP/15 - - - Dated:- 15-6-2016 - Shri Kul Bharat, JM And Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Feeling aggrieved, the assessee carried the matter in appeal before the Ld CIT(A) who has allowed the claim following the earlier decisions of the ITAT. Now the Revenue is appeal against the said order of Ld CIT(A). 2.1 The Ld. AR has submitted that the issue is covered by the decisions of Hon ble ITAT, Jaipur Bench in following cases:- (a) Assessee s own case by Hon ble ITAT, Jaipur M/s Shree Salasar Overseas (Pvt) Ltd. vs. CIT-I Jaipur ITA No. 433/JP/2011 with reference to order u/s 263 passed by CIT. (b) Assessee s own case by Hon ble ITAT, Jaipur M/s Shree Salasar Overseas (Pvt) Ltd. vs. ACIT, Circle-2, Jaipur in ITA No.910/JP/2013 (AY 2005-06), 911/JP/2013 (AY 2007-08) and 912/JP/2013 (AY 2008-09) with reference to order by AO u/s 148 on same issue. The ld. AR submitted that the ld. AO rejected the assessee s claim on the same ground and on same facts and law on which he has disallowed the provision for development expenses for A.Ys. 2005-06, 2007-08 and 2008-09. In respect of earlier years, the ld. CIT(A) allowed the provision for development expenses and the department filed the appeal before the ITAT. The ITAT set aside the assessment proceedings and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case are that the assessee has made payments exceeding ₹ 20,000/- against purchase of land during the period under consideration, otherwise than by an account payee cheque. During the course of assessment proceedings, the assessee was asked to explain as to why the above mentioned expenses should not be disallowed in view of provisions of section 40A(3) of the IT Act. In response, the AR of the assessee furnished copies of vouchers of these payments and pleaded that payments were made in cash on bank holidays or after banking hours. The AO did not agree with the contention of the AR and held that the AR failed to give any detail reason/ requirement to make such payment to various parties on a particular day or after banking hours. As per AO, substantial part of the payment to the above parties had already been made by the assessee through cheques on different dates up to 2005 as observed from the details of payment submitted by the AR. After a gap of 3 to 4 years payments were made in cash not to a particular party but to various parties clears that there was no such requirement before the assessee to make payments in cash to all such parties and the AR also failed to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 74.51 lacs, it was further submitted that the 5 payments totalling to ₹ 23,00,000/- was made on 10.5.2009 which was Sunday, 14 payments totalling to ₹ 46,00,000/- were made on 24.05.2009 which was also on Sunday. On Sunday, the banks remains closed and therefore covered under exceptions mentioned in clause 6DD. The remaining 2 payments of ₹ 5,00,000/- and ₹ 51,000/- were made on 15.10.2009 and 27.07.2009 after banking hours. 3.6 It was further submitted that the ld. AO failed to appreciate the relaxation provided under Second proviso to section 40A(3) of Income Tax Act. The second Proviso to section 40A(3) is as under: Provided further that no disallowance under this sub-section shall be made where any payment in a sum exceeding (twenty thousand) rupees is made otherwise than by crossed cheque drawn on a bank or by 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, consideration of business expediency and other relevant factors. It was submitted that the words having regard to the nature and extent of banking facilities available, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these cash payments of ₹ 74.51 lacs constitute only a small percentage of total payments towards purchase of land totalling to ₹ 236.90 crores during the year under consideration and thus constitute an exception rather than a norm. In our view, the need for cash payments on Sundays/after banking hours and test of business expediency has been satisfactorily fulfilled in the instant case and the second proviso to section 40A(3) read with Rule 6DD which provides relaxation from the rigour of disallowance under section 40A(3) is clearly attracted. 3.10 Further it is noted that the assessee has been in this line of business and in the past under similar circumstances, cash payments have been made to the farmers for purchase of the land and the Co-ordinate Bench vide its order dated 28.03.2014 has deleted the disallowance in A.Y. 2006-07, 2007-08 and 2008-09. 3.11 In the light of above discussions, facts and circumstances of the case and respectfully following the decision of the Co-ordinate Bench (supra), we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the disallowance of ₹ 74,51,000 u/s 40A(3) of the Income Tax Act. 1961. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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