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TMI Blog2019 (12) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... is a Company, which is engaged in the business of transportation. The return of income for the year under consideration was filed by it on 30.10.2015 declaring total income of Rs. 2,61,434/-. During the course of assessment proceedings, the Assessing Officer noticed that the payments against the following expenditure were made by the assessee in cash:- Sr. No. Head of Expenditure Amount of expenditure 1. Business Promotion Rs. 1,48,520/- 2. Stores & Consumables Rs. 74,422/- 3. Electricity, Power & Fuel Rs. 9,45,100/- 4. Car Hire Charges (Freight Charges) Rs. 19,93,575/- Since the above payments were made by the assessee in cash in violation of provisions of section 40A(3) and there were no exceptional circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards the electricity, power and fuel expenses aggregating to Rs. 9,45,100/- disallowed by the Assessing Officer under section 40A(3), the ld. CIT(Appeals) found that there were ten instances involving the total expenditure of Rs. 3,51,300/- where the bill amount as well as cash payment made by the assessee exceeded Rs. 20,000/-. He accordingly sustained the disallowance made by the Assessing Officer under section 40A(3) on account of electricity, power and fuel charges to Rs. 3,51,300/-. Similarly he found that out of the business promotion expenses of Rs. 1,48,520/- and stores & consumables of Rs. 74,422/- disallowed by the Assessing Officer under section 40A(3), the amount to the extent of Rs. 1,28,134/- and Rs. 54,949/- was related t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payments of such expenditure was made by the assessee in cash not exceeding a sum of Rs. 35,000/-, the disallowance confirmed by the ld. CIT(Appeals) is not sustainable. I accordingly delete the said disallowance sustained by the ld. CIT(Appeals) to the extent of Rs. 1,03,500/- and allow Ground No. 1 of the assessee's appeal. 5. As regards the issue involved in Ground No. 2 relating to the disallowance of Rs. 3,51,300/- made by the Assessing Officer and sustained by the ld. CIT(Appeals) out of electricity, power and fuel, the ld. Counsel for the assessee has contended that the said expenditure, keeping in view the nature of assessee's business of transportation of goods, should be treated as freight charges and the disallowance made unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the specified limit. I am unable to accept this contention of the ld. Counsel for the assessee. As per the provisions of section 40A(3), where the assessee incurs any expenditure in respect of which the payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a Bank or account payee Bank Draft exceeds the specified limit, no deduction shall be allowed in respect of such expenditure. It is thus clear that what is relevant for the purpose of applicability of section 40A(3) is a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a Bank or account payee Bank Draft against any expenditure incurred by the assessee exceeding the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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