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Disallowance u/s 40A(3) for payments exceeding the prescribed limit should be examined considering the business exigencies. If the expenses are necessary for running the business and the revenue has no doubt about the payee's identity and transaction genuineness, disallowance is not required. In the given case, the excess payment may be necessary for the event management business, so the addition made by the AO and sustained by the CIT(A) cannot be sustained. Deduction claimed u/s VI-A in returns filed in response to notice u/s 153A/B/C is allowed, as the decision in CIT vs. Sun Engineering Works is not applicable to such returns. The CIT(A)'s findings on this issue cannot be sustained. The Assessing Officer should calculate the refund of TDS to the appellant as per the Income Tax Act provisions. The CIT(A)'s view of restricting TDS credit to the appellant's name and business income assessed is not upheld.
Disallowance u/s 40A(3) for payments exceeding the prescribed limit should be examined considering the business exigencies. If the expenses are necessary for running the business and the revenue has no doubt about the payee's identity and transaction genuineness, disallowance is not required. In the given case, the excess payment may be necessary for the event management business, so the addition made by the AO and sustained by the CIT(A) cannot be sustained. Deduction claimed u/s VI-A in returns filed in response to notice u/s 153A/B/C is allowed, as the decision in CIT vs. Sun Engineering Works is not applicable to such returns. The CIT(A)'s findings on this issue cannot be sustained. The Assessing Officer should calculate the refund of TDS to the appellant as per the Income Tax Act provisions. The CIT(A)'s view of restricting TDS credit to the appellant's name and business income assessed is not upheld.
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