The ITAT partially upheld the disallowance under section 40A(3),...

The ITAT partially upheld the disallowance under section 40A(3), allowing cash payments of Rs. 1,10,000 and Rs. 23,655 related to legal and professional expenses for stamp paper purchase and IMFL lorry accident, respectively, as legitimate. However, other expenses supported only by ledger accounts without corresponding vouchers or bills, including travel expenses, were correctly disallowed. Regarding the adjustment of disallowance under section 14A while computing income under section 115JB for MAT purposes, the tribunal reaffirmed that no such adjustment is permissible in book profits, consistent with precedent from the jurisdictional High Court and Special Bench decisions favoring the assessee. Thus, the appeal was partly allowed in respect of the disallowed expenses and the MAT adjustment claim was rejected.

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