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THE COMMISSIONER OF INCOME TAXAHMEDABAD - IV Versus SHREE VALLABH GLASS WORKS LTD

2016 (8) TMI 568 - GUJARAT HIGH COURT

Disallowance invoking section 40A(3)- AO assessed a sum being the amount appearing in credit side of the suspense account because the assessee had not given any cogent reason for explaining the same - Held that:- When the Assessing Officer is assessing the amount written back as income of the assessee, which pertained to the earlier year, the expenditure should be allowed as a deduction either as an expenditure of this year or as an adjustment against the amount written back. The CIT (A), theref .....

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and disposed of by this common oral judgment. 2. By way of these appeals, the appellant - department has challenged the order passed by the tribunal whereby the Tribunal has dismissed the appeals of the revenue by confirming the order of the CIT (A) and reversed the order of the AO. 3. The short facts of the case are that during the course of the assessment proceedings, the AO found various payments exceeding ₹ 2500/- made in cash, in breach of Section 40A(3) of the Act. The AO therefore .....

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However, the amount of disallowance is different in each of the appeal. Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT (A) deleting the disallowance of ₹ 1,42,17,740/- made invoking the provisions of Section 40A(3)? 5. Learned Counsel Mr.Nitin Mehta appearing for the department has contended that the Tribunal has committed serious error while confirming the order passed by the CIT (A) and reversing the order of the AO. He has contende .....

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n the payment of freight charges in cash could not be disallowed u/s. 40A(3) as it is a general practice that transporters do not accept payments otherwise than in case. The CIT (A) has already disallowed a sum of ₹ 1,60,000, which was payment for purchase of chemicals. Therefore, we do not find any infirmity in the order of the CIT (A) in giving relief to the assessee of ₹ 1,42,17,740. The same is upheld. 5.2 In support of the submissions, learned Counsel for the department has plac .....

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er has observed thus: I have considered the above arguments carefully and I have gone through the assessment order, copies of transport receipts and the case laws reliefs upon by the appellant. I find that considering the nature of business of the appellant, it had to procure raw materials from various places, which were to be transported and on the transport receipts also it is clearly mentioned that pay cash to the Driver which clearly means that payment in cash was insisted upon by the transp .....

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