TaxTMI 
TaxTMI 
2019 (12) TMI 596
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....is a Company, which is engaged in the business of transportation. The return of income for the year under consideration was filed by it on 30.10.2015 declaring total income of Rs. 2,61,434/-. During the course of assessment proceedings, the Assessing Officer noticed that the payments against the following expenditure were made by the assessee in cash:- Sr. No. Head of Expenditure Amount of expenditure 1. Business Promotion Rs. 1,48,520/- 2. Stores & Consumables Rs. 74,422/- 3. Electricity, Power & Fuel Rs. 9,45,100/- 4. Car Hire Charges (Freight Charges) Rs. 19,93,575/- Since the above payments were made by the assessee in cash in violation of provisions of section 40A(3) and there were no exceptional circumstances....
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....egards the electricity, power and fuel expenses aggregating to Rs. 9,45,100/- disallowed by the Assessing Officer under section 40A(3), the ld. CIT(Appeals) found that there were ten instances involving the total expenditure of Rs. 3,51,300/- where the bill amount as well as cash payment made by the assessee exceeded Rs. 20,000/-. He accordingly sustained the disallowance made by the Assessing Officer under section 40A(3) on account of electricity, power and fuel charges to Rs. 3,51,300/-. Similarly he found that out of the business promotion expenses of Rs. 1,48,520/- and stores & consumables of Rs. 74,422/- disallowed by the Assessing Officer under section 40A(3), the amount to the extent of Rs. 1,28,134/- and Rs. 54,949/- was related to....
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.... payments of such expenditure was made by the assessee in cash not exceeding a sum of Rs. 35,000/-, the disallowance confirmed by the ld. CIT(Appeals) is not sustainable. I accordingly delete the said disallowance sustained by the ld. CIT(Appeals) to the extent of Rs. 1,03,500/- and allow Ground No. 1 of the assessee's appeal. 5. As regards the issue involved in Ground No. 2 relating to the disallowance of Rs. 3,51,300/- made by the Assessing Officer and sustained by the ld. CIT(Appeals) out of electricity, power and fuel, the ld. Counsel for the assessee has contended that the said expenditure, keeping in view the nature of assessee's business of transportation of goods, should be treated as freight charges and the disallowance made under....