Case Law Details
Gouri Shankar Jain Vs CIT(A) (ITAT Kolkata)
Introduction: In the case of Gouri Shankar Jain vs CIT(A), the dispute centers around the disallowance of Rs. 69,500 under Section 40A(3) of the Income Tax Act. The disallowed amount pertains to cash expenditures exceeding Rs. 20,000 for repairs, specifically Rs. 34,500 for body-making charges on 12.10.2012 and Rs. 35,000 for alternator repairing works on 08.01.2013. The crux of the matter lies in the assertion that these payments were made by the driver, acting as an agent of the assessee.
Detailed Analysis: The Assessing Officer (AO) disallowed the repairs and maintenance expenses, invoking Section 40A(3) due to cash payments. The appellant argued that the payments were made by the driver, acting as an agent, and fall under the exception provided by Rule 6DD(k) of the Income Tax Rules. This rule exempts payments made in cash by a person to his agent for goods or services on his behalf.
The appellant highlighted that the exceptional circumstances, including the lack of banking facilities while a vehicle was in transit, justified the cash payments made by the driver. The ledger accounts and bills were presented as evidence to support the genuineness of the transactions.
Conclusion: The Tribunal, upon considering the facts and Rule 6DD(k), found merit in the appellant’s contention. The disallowance under Section 40A(3) was set aside, emphasizing that the payments were made by the driver, acting as an agent. The case underscores the importance of understanding exceptions to tax provisions and providing substantiating evidence for genuine transactions.
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