Section 40A(3) Disallowance not applicable on cash payment to MSEDCL

Hotel Rajdhani Vs DCIT, CPC (ITAT Nagpur)

The only issue is to be decided is as to whether the CIT(A), NFAC, Delhi justified in confirming the disallowance made by the AO u/s. 40A(3) on account of cash payment towards electricity bill paid to Maharashtra State Electricity Distribution Company Limited (MSEDCL).

MSEDCL is a State under Article 12 of the Constitution and the cash payments made to its franchise/agent is covered under Rule 6DD(b) of the Rules. Therefore, the disallowance under Section 40A(3) made by the CPC and as confirmed by the CIT(A) is not justified.

FULL TEXT OF THE ORDER OF ITAT NAGPUR

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