TaxTMI 
TaxTMI 
2016 (4) TMI 630
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....f Income Tax (Appeals) has erred in law and on facts in allowing the relief of Rs. 40,89,974/- on account of payment 'made to M/s Agrima Medicos without appreciating the fact that the assessee has made cash payment exceeding Rs. 20,000/- which was not allowable u/s 40A(3). 4. The Commissioner of Income Tax (Appeals) has erred in law and on facts in allowing the relief of Rs. 10,91,901/- on account of cash payment of salary and wages without appreciating the fact that the assessee could not furnish the details of such employees to whom these payments were made. 2. Apropos ground No.1, it is noticed that the Assessing Officer has disallowed Rs. 3,31,560/- under section 40A(3) of the Income Tax Act, 1961 (hereinafter called in short "the Act") for non-production of details of suppliers and bills & vouchers, against which an appeal was filed before the ld. CIT(A) with the submission that the expenditure debited during the year can only be considered for disallowance under section 40A(3) of the Act; whereas this expenditure of Rs. 3,31,560/- is debited to the profit and loss account for assessment year 2010-11 under the head "repairs and maintenance of building". The sam....
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....rticular limit. But the ld. CIT(A) has not appreciated the provisions of sub-section 3A of section 40A of the Act and deleted the addition. For the sake of reference, we extract the relevant portion of the order of the ld. CIT(A) as under:- "Ground No.3 relates to disallowance of Rs. 3,31,560/- under section 40A(3). The Assessing Officer has disallowed Rs. 3,31,560/- under section 40A(3) for non-production of details of supplier and bills and vouchers. The A.R. of the assessee has submitted that the expenditure debited during the year can only be considered for disallowance under section 40A(3), whereas this expenditure of Rs. 3,31,560/- is debited to profit and loss account for assessment year 2010-11 under the head repairs and maintenance building and on account of non-payment, the same amount is shown as liability in the balance sheet ending on 31.3.2010. This liability has been paid during the year and no separate expenditure of Rs. 3,3,1,560/- is debited during the year. The payment made in cash is duly reflected in cash book and ledger of repair and maintenance are maintained. The A.R. of the assessee has vehemently argued that the return of income filed by the asses....
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....ary to the Directors" debited to the profit and loss account at Rs. 7.16 lakhs. The payment of Rs. 6 lakhs made to staff has been recorded in the books of account with proper payment evidence. The ld. CIT(A) was also convinced that the advance paid to staff at Rs. 1.16 lakhs has been wrongly taken by the Assessing Officer as bonus payment to staff. He accordingly deleted the addition. 8. Now the Revenue is in appeal before the Tribunal and simply placed reliance upon the order of the Assessing Officer; whereas the ld. counsel for the assessee has contended that the ld. CIT(A) has examined the details of payments and being convinced with the explanations of the assessee, he has deleted the addition. 9. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the ld. CIT(A) has examined the details of payment and was of the view that there is no unpaid liability before filing the return of income concerning to the assessment year. Since the ld. CIT(A) has properly examined the issue, we find no infirmity in his order and we accordingly confirm the same. 10. Apropos ground No.3, it is noticed that the Assessing Officer ....
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.... raised to the various patients. The A.R. of the assessee has very clearly mentioned all the aspects of the transactions in his submission and the arguments as placed above. Here M/s Agrima Medicos raises bills in the name of the patients and the payments are made by the concerned employer/Government Organization. Such supply of medicines are neither part of the purpose of the assessee-company nor the payments are made to the assessee company. Since, such payments are not debited with expenditure to the profit and loss account, disallowance under section 40A(3) by the Assessing Officer is completely misplaced. The system of arrangements as explained above is not understood correctly by the Assessing Officer. The A.R. of the assessee has clearly mentioned and explained that there has not been any contract for payments of supply of such medicines to various patients. The assessee hospital is nowhere responsible for any non-payment or short payment to M/s Agrima Medicos. Accordingly, the disallowance made by the Assessing Officer under section 40A(3) is misplaced and the same is hereby deleted." 12. Aggrieved, the Revenue is in appeal before the Tribunal and placed reliance upon th....
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..... The ld. CIT(A) re-examined the issue in the light of the detailed explanations of the assessee and being convinced with it, he restricted the addition to Rs. 2 lakhs. The relevant observations of the ld. CIT(A) are extracted hereunder:- "I have considered the submissions and the arguments placed by the A.R. of the assessee along with the contents of the assessment order. It is undisputed that the salary and wages debited to profit and loss account has been reconciled with the cash book and the assessee has been maintaining the books of account along with the payments slip and their muster. The A.R. has submitted the evidence of payments made to the various staff along with the evidence of payment vouchers. He has been emphasizing as discussed above, that the books of account are not subjected and no specific defects or bogus payments has been pointed out by the Assessing Officer, thereby, the disallowance made by the Assessing Officer is purely on arbitrary and ad hoc basis. The assessee being the Private Limited Company has no personal expenses or otherwise non-business expenditure for the purpose of payment made to staff and others. The arguments as placed above by the....