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1 - 10 of 15 (0.66 seconds)Smt. Harshila Chordia vs Income-Tax Officer on 7 November, 2006
Further, as held by the Hon'ble
Rajasthan High Court in case of Harshila Chordia (supra), the consequences, which were
to befall on account of non-observation of sub-section (3) of section 40A must have
nexus to the failure of such object. Therefore the genuineness of the transactions and it
being free from vice of any device of evasion of tax is relevant consideration. The intent
and the purpose for which section 40A(3) has been brought on the statute books has
been clearly satisfied in the instant case. Therefore, being a case of genuine business
transaction, no disallowance is called for by invoking the provisions of section 40A(3) of
the Act."
Attar Singh Gurmukh Singh vs Income Tax Officer, Ludhiana Etc on 7 August, 1991
Such type of factors
and circumstances may differ from case to case and all the cases cannot be looked into
by straight away finding their mention under the list provided under Rule 6DD. The list
provided under Rule 6DD, in our view gives an example of exceptional circumstances
which may be considered as exception to the applicability to the provisions of Section
40A(3) of the Act and therefore, the list is a guiding tool but is not exhaustive. The proviso
to Section 40A(3) of the Income Tax Act has taken care of the conditions under which
the payment made by other than banking channel have been kept outside the purview
of Section 40A(3) so that the normal business activity should not be affected. Hon'ble
Supreme Court in the case of Attar Singh Gurmukh Singh V ITO (supra) has held as under :
Maa Saraswati Steel Industries,, ... vs Income-Tax Officer,, on 28 April, 2017
14. Similarly, we find that the Coordinate Chandigarh Benches in case of ITO vs
Kailash Sharma (supra) has held as under:
Cit vs Sirmour Truck Operators Union on 12 December, 2007
8. The Ld. CIT(A) considering the submissions of the assessee held that the issue
under consideration needs to be looked at firstly from the perspective that where the
payments are made to members of the Union and not made to the third party, whether
the provision to section 40A(3) are applicable and secondly, on account of business
expediency. Regarding the payment of amount to the members of the Union, the Ld.
CIT(A) referred to the decision of Hon'ble Punjab & Haryana High Court in case of CIT-1
Vs. Truck Operator Union wherein the Hon'ble High Court treated the payment as one
to its member ableit under section 40(a)(ia) has some value in the instant case though
the issue of contractual obligation is not relevant in the instant case.
Bhumi Sudhar Nigam vs Cit on 3 December, 2004
Further the Ld.
CIT(A) referred to the decision of Hon'ble Gauhati High Court in the case of Janam
Bhumi Vs. CIT (supra) wherein it was held that where the payer and the payee are one
and the same person and the genuineness of the payment is not in dispute, provision of
section 40A(3) are not applicable. Drawing support from the decision of the Hon'ble
Gauhati High Court, the Ld. CIT(A) held that in view of the factual matrix of the case,
the assessee AOP is not itself in the business of running trucks on hire but works as a
facilitator for its members and retains an insignificant amount in terms of materiality qua
the total turnover which does not meet the ingredients of a commercial commission
but at best comprises a fee which is used for the benefit of its members and it was
5
accordingly held that the payment to members of the AOP do not come within the
ambit of Section 40A(3) of the Act.
Anupam Tele Services vs Income Tax Officer....Opponent(S) on 22 January, 2014
"4.5 The genuineness of the transaction as well as the identity of the payee are
not disputed. Further, the appellant has explained the business expediency of
making the cash payments to both the parties which has not been controverted
by the Revenue. Following the decision of Gujarat High Court in case of Anupam
Tele Services (supra) and Rajasthan High Court in case of Harshila Chordia
(supra), the addition of Rs. 45,738/- under section 40A(3) is deleted."
A Daga Royal Arts, Jaipur vs Ito, Jaipur on 15 May, 2018
13. We have heard the rival contentions and purused the material available on
record. The matter relating to provisions contained in Section 40A(3), the legislative's
intent behind introduction of section 40A(3), whether genuine and bonafide
transactions are covered within the sweep of section 40A(3) or not, and whether the
exceptions provided in Rule 6DD are exhaustive or not, the Jaipur Benches of the
Tribunal (speaking through one of us) in case of in case of M/s A Royal Daga Arts vs ITO
Ward-2(2), Jaipur [2018] 94 taxmann.com 401 (Jaipur - Trib.)
Mudiam Oil Co. And Ors. vs Income-Tax Officer And Ors. on 21 July, 1971
It is also open to the assessee to identify the person who
has received the cash payment. Rule 6DD provides that an assessee can be
exempted from the requirement of payment by a crossed cheque or crossed
bank draft in the circumstances specified under the rule. It will be clear from the
provisions of section 40A(3) and rule 6DD that they are intended to regulate the
business transactions and to prevent the use of unaccounted money or reduce
the chances to use black-money for business transactions. - Mudiam Oil Co. v.
ITO [1973] 92 ITR 519 (AP). If the payment is made by a crossed cheque on a bank
or a crossed bank draft, then it will be easier to ascertain, when deduction is
claimed, whether the payment was genuine and whether it was out of the
income from disclosed sources. In interpreting a taxing statute the Court cannot
be oblivious of the proliferation of black-money which is under circulation in our
country. Any restraint intended to curb the chances and opportunities to use or
create black-money should not be regarded as curtailing the freedom of trade
or business."
Fakhri Automobiles vs Commissioner Of Income-Tax on 12 September, 1978
22. Further, the Hon'ble Supreme Court upheld the applicability of section 40A(3) to
payment made for acquiring stock-in-trade and raw materials and also affirmed the
decision of Hon'ble Rajasthan High Court in case of Fakri Automobiles v. CIT [1986] 160 ITR
504 (Raj) to the effect that the payments made for purchasing stock-in-trade or raw
material should also be regarded as expenditure for the purposes of section 40A(3) of
the Act.