2014 (6) TMI 245

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....ed 10.12.2010. 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance made by AO u/s. 40A(3) of the Act for cash payment regarding business purposes. For this, assessee has raised following ground no.1: "1. That on facts and circumstances of the case the Ld. CIT(A) was not justified to confirm the addition a sum of Rs.9,25,000.00 u/s. 40A(3) of the I. T. Act, 1961. The reasons adduced by him against such addition are vague and arbitrary." 3. Brief facts leading to the above issue are that the assessee is engaged in the business of purchase and sale of lands. The AO during the course of assessment proceedings noticed that the assessee has made payments to various parties in cash in r....

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.... have heard rival submissions and gone through facts and circumstances of the case. Admittedly, the assessee's nature of business was trading in land. During the year under consideration the assessee purchased land to the tune of Rs.67,49,315/- from different parties. The assessee made payments partly by cheque and partly in cash exceeding Rs.20,000/- from the six parties in total amounting to Rs.9,25,000/- (details of these parties are narrated in the assessment order). Ld. counsel for the assessee Shri M. Bhattacharjee relied on the decision in the case of S. A. Builders Ltd. Vs. CIT (2007) 288 ITR 1 (SC). Wherein the expression commercial expediency is explained that it is an expression of wide import and includes such expenditure as a p....

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....the provisions of Rule 6DD of the Rules. Hence, it cannot be said that the assessee has immunity from the provisions of section 40A(3) of the act. So, we are of the view that the lower authorities have rightly invoked the provisions of section 40A(3) of the Act and made the disallowance. We confirm the same. This issue of assessee's appeal is dismissed. 5. The next issue in this appeal of assessee is as regards to disallowance of 50% of business expenditure of Rs.80,150/- under the head 'Subscription & Donations'. For this, assessee has raised following ground no.2: "2. That the Ld. CIT(A) was wrong to confirm 50% disallowance of the business expenditure amounting to Rs.80,150.00 under the head subscription & donation to local clubs a....