Case Law Details
Ahmed World Travels Tours & Cargo Pvt. Ltd Vs ACIT (OSD) (ITAT Chennai)
As regards cash payments made for hotel expenses, although, the Assessing Officer stated that the assessee has incurred expenses in cash, but it was the argument of the assessee that it has purchased foreign currency (Saudi Riyal) to be given to its customers, who travel for Hajj pilgrimage as per itinerary and customers paid hotel bills in foreign currency. The assessee had also filed license issued by the Reserve Bank of India to deal with foreign currency in light of provisions of clause (l) of Rule 6DD of I.T Rules, 1962, and argued that it needs to make payment in cash for buying foreign currency. The facts are contradictory. The Assessing Officer observed that the assessee has paid cash for hotel expenses, whereas the assessee claims that it has paid cash for purchase of foreign currency and expenditure has been incurred in foreign currency by its customers. If at all, claim of the assessee is correct, then case of the assessee comes under clause (l) of Rule 6DD of I.T. Rules, 1962, which says where payment is made by authorized dealer or money changer against purchase of foreign currency or traveler cheque in the normal course of business, then cash payment cannot be disallowed u/s.40A(3) of the Income Tax Act, 1961. This fact needs verification from the Assessing Officer. If the Assessing Officer finds that the assessee being a forex dealer paid cash for purchase of foreign currency, then its case comes under exception as provided under clause (l) of 6DD of I.T. Rules, 1962, and thus, the Assessing Officer shall delete additions made towards disallowance of cash payment u/s.40A(3) of the Act. Hence, we set aside the issue to the file of the Assessing Officer and direct the A.O to reconsider the issue in light of our findings given hereinabove and decide the issue in accordance with law, after giving an opportunity of hearing to the assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against order of the Commissioner of Income Tax (Appeals)-1, Chennai dated 29.06.2018 and pertains to assessment year 2015-16.
2. The assessee has raised following grounds of appeal:-
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