1995 (11) TMI 87

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.... lie in a narrow compass.The assessee is a registered firm. It procured a ginning and pressing factory on lease from a charitable trust on a monthly rent of Rs. 35,000. The Assessing Officer noted that the assessee made payment to the trust by way of rent in violation of section 40A(3) of the Income-tax Act, 1961, to the extent of Rs. 1,90,248 and added the same to the income of the assessee. In appeal, the Commissioner of Income-tax (Appeals) deleted the amount of Rs. 67,248 being payments made on Saturdays after banking hours. The Tribunal, however, deleted the entire addition and held that the trust was duly identifiable and the payments made by the assessee are manifestly verifiable. The assessment order for the assessment year 1986-87 ....

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....that no disallowance under this sub-section shall be made where any payment in a sum exceeding ten thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors." The Appellate Tribunal found that the genuineness of the payee has not been doubted by the Assessing Officer. It was found that the payment of the sum exceeding the limit was made under exceptional and unavoidable circumstances. Placing reliance on Porwal Udhyog (India) v. CIT [1982] 135 ITR 591 (MP) it was found that no disallowance was p....

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....rect path. " It is one of surest indexes of a mature and developed jurisprudence . . . to remember that statutes always have some purpose or object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. " There is no doubt about the purpose or object of the relevant provision. To accomplish it, we cannot ignore the second proviso engrafted to fill gaps and mitigate hardships. The Tribunal on appreciation of facts applied this proviso and held that disallowance of payments made to the trust and consequent addition of an equivalent amount to the income as returned were steps hostile to the purpose and object and that the assessee was required to be given the benefit of such payments made in excep....