TaxTMI 
TaxTMI 
2021 (7) TMI 1188
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....obabilities, facts and circumstances of the case. 2. The learned CIT[A] is not justified in upholding the disallowance of Rs. 1,41,03,750/- u/s. 40A[3] of the Act in respect of the payments made by the appellant as the agent of housing society for purchase of lands on which residential sites were to be formed for the members of the housing society and thus, these payments made were covered under the exception provided under Rule 6DD[k] of the I.T. Rules, under the facts and in the circumstances of the appellant's case. 3. The learned CIT[A] further failed to appreciate that the appellant had made the cash payments for purchase of lands at the insistence of the Vendors who were all agriculturist and some of whom did not even have ban....
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....tails. 2.1. During the course of assessment proceedings, the Ld. AO observed that assessee debited sum of Rs. 4,38,21,784/- to the P & L account by way of purchase of land. The Ld. AO treated the land purchased as stock in trade and the cash purchases incurred amounting to Rs. 1,41,03,750/- as not allowable under section 40(A)(3) of the Act. The Ld. AO observed that, the payments were made in the name of Laughter Yoga International Foundation, and not in the name of the vendors. 2.2. The Ld. AO called upon assessee to explain why the cash payment and checked payment made in the name of Laughter Yoga Foundation should not be disallowed. In response the assessee submitted that, it acted as agents of Society for acquisition of land and the a....
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....t acquired lands. For purpose of acquisition it made payment of Rs. 1,41,03,750/- by cash to the parties, which is disallowed by the Ld. AO under section 40(A)(3) of the Act. 3.3. The Ld. Counsel submitted that, assessee has also made payment in cheque to the said parties, which has been encapsulated in the assessment order at page 2. The agreements entered into with parties have been registered and stamp duty has been paid as per the market value. 3.4. He submitted that in the paper book at page 10-81 the agreements pertaining to purchase of the land from the relevant parties are placed along with the Ledger account wherein the payment paid to various vendors are mentioned as per the books of account of assessee. The Ld. Counsel submitte....
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....sity shown by assessee to make the payment in cash is that, the vendors insisted at the last moment in certain cases. It is also noted that the said monies paid in cash to various vendors are out of drawings made from bank accounts and therefore exigency in making the such payment in cash cannot be suspected. 5.4. In case of an CIT vs. Nam Estates Pvt. Ltd., relied by the Ld. Sr. DR, we note that the reason for which the cash payments were made therein by the assessee was found to be incorrect. In the present facts of the case the reason for making the payments in cash to certain vendors by the assessee has not been found to be incorrect by any of the authorities below. There is no iota of evidence that is brought on record which could cas....