Section 40A(3) applies to revenue expenditure, not to capital investments: Delhi HC

PCIT Vs Sanskar Homes Pvt. Ltd. (Delhi High Court)

Summary: In the case of PCIT Vs Sanskar Homes Pvt. Ltd., the Delhi High Court examined the applicability of Section 40A(3) of the Income Tax Act concerning cash payments made for acquiring property. The assessee, M/s. Sanskar Homes Pvt. Ltd., had entered into agreements to purchase two floors of a property, treating them as investments rather than stock-in-trade. The Assessing Officer disallowed cash payments amounting to ₹7.43 crore, arguing that they attracted disallowance under Section 40A(3). However, the ass

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