Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: cpt :: articles on VAT and GST in India :: empanelment :: VAT RATES :: VAT Audit :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4% :: form 3cd
 
 
« From the Courts »
  Nishant Construction Pvt. Ltd vs. ACIT (ITAT Ahmedabad)
 Samson Maritime Ltd vs. CIT (Bombay High Court)
 Mother Hospital Pvt. Ltd vs. CIT (Supreme Court)
 Larsen & Toubro Ltd vs. State of Jharkhand (Supreme Court)
 Nishant Construction Pvt. Ltd vs. ACIT (ITAT Ahmedabad)
 Flipkart India Private Limited vs. ACIT (Karnataka High Court)
 JSW Steel Ltd vs. ACIT (ITAT Mumbai)
  CIT vs. Uday M. Ghare (Bombay High Court)
 Ajay Enterprises Pvt. Ltd. Vs. Assistant Commissioner Of Income Tax (Tds) And Ors.
 Rakesh Raj And Associates Vs. Commissioner Of Income Tax, Central-Ii & Anr.
 Venu Charitable Society And Anr. Vs. Director General Of Income Tax

Basu Distributor Pvt Ltd vs. ACIT (Delhi High Court)
March, 17th 2012

S. 40A(3): Financial crises may be exceptional or unavoidable circumstance for cash payment
 
The assessee made payments exceeding Rs. 10,000 in cash and claimed that a disallowance u/s 40A(3) read with Rule 6DD(j) & Circular No.220 dated 31.05.1997 could not be made as a payment by cheque etc was not possible due to exceptional or unavoidable circumstances etc. The Tribunal rejected the assessees claim on the ground that that the assessees explanation that the payees would not accept cheques as they had been dishonoured on earlier occasions was fantastic and fanciful as in such case the assessee could have deposited cash and obtained bank drafts. It was also held that the assessee had not explained how it obtained the cash for making the payments & if the amounts were borrowed, there was a violation of s.269SS. On appeal by the assessee to the High Court, HELD reversing the Tribunal:
 
S. 40A (3) & Rule 6 DD (j) have been incorporated in the Act to check the incurring of bogus and fictitious expenses to non existing parties. In the present case, there is no dispute on the identity of the payee and genuineness of the transaction. The only question is whether the assessee has been able to establish exceptional or unavoidable circumstances why the payment made in cash. The assessee was not doing well in its business and was facing liquidity and financial crunch. The assessees explanation that payments were made in cash as preparation of a bank draft or issue of cheque would have resulted in a missed opportunity or failure of a good business deal with third parties is acceptable because there were earlier cases of bounced cheques and when a party is facing liquidity problem, it can get difficult as third parties are reluctant to accept cheques and insist on cash payments. Arranging funds is also a problem and not easy. Also, the cash was obtained from a known party and the AO had not made any addition on that score. Accordingly, disallowance u/s 40A(3) was not justified.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions