1985 (12) TMI 129

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....being related to minor issues) 2. The second disputes relates to disallowance under s. 40A(3) of the IT Act. The ITO found that cash payment of Rs. 11583 had been made to M/s. Rameshchand Somchand Mansa and Rs. 14,645 to M/s. Rathio Gum Industries. In respect of the former, the assessee furnished a letter from the Agent of SBBJ, Sanchore that during the year 1978-79, drafts of more than Rs. 500....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ircumstances of the case, we are not inclined to agree with the conclusion of the authorities below. In this behalf Mr. Ranka took us through the entire history of s. 40A(3) which, according to him, had also been looked into by the Hon'ble Rahasthan High Court in M/s. Kantilal Purshottam and Co. vs. CIT in DB IT Ref. No. 8 of 1975 decided on 29th Feb., 1985, since reported in (1986) 53 CTR (Raj) 1....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....iate concerns will have to pass the test of reasonableness in order to qualify for deduction. Further, I propose to provide that payments made in amounts exceeding Rs. 2,500 after a date to be notified later will be allowed as a deduction only if these are made by crossed cheque or by Bank draft." According to their Lordships the very purpose of introducing this section was a check over the dis....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed in relation thereto and the benefit of these doubts should go to the assessee. In that particular case, the genuineness of the payment had been established and notwithstanding the fact that there was technically breach of the provisions of s. 40A(3), the assessee was held entitled to the benefit the exemption under cl. (f) and (j) in respect of payments made for purchase of good from other trad....