TaxTMI 
TaxTMI 
1990 (1) TMI 105
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....ent years paid salaries to the members of the staff by way of cash exceeding Rs. 2,500. This it claimed as a revenue deduction while computing its taxable income. The ITO was of the view that since the payment was made in cash exceeding Rs. 2,500, the provisions of s. 40A(3) were attracted, he accordingly disallowed this payment by applying s. 40A(3). The plea of the assessee that the genuineness of the payment as well as identity of the payees being not in doubt as well as the insistence of the staff to receive the salary in cash was rejected by the ITO. The ITO was also of the view that the case of the assessee did not fall under r. 6DD(j) of the IT Rules, 1962 since no exceptional or unavoidable circumstances existed for the payment bein....
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.... by him was that when the payment was made in cash its genuineness not being in dispute and circumstances existed for making such payments in cash s. 40A(3) could not be applied in such a case. The learned departmental Representative, on the other hand, vehemently contended that since the payments had been made in cash and since no unavoidable or exceptional circumstances existed to make such payment in cash, s. 40A(3) squarely applied and the ITO had correctly made the disallowance. He relied upon the decision of the Andhra Pradesh High Court in the case of Late Smt. Jyothi Chellaram vs. CIT (1988) 73 CTR (AP) 167 : (1988) 173 ITR 358 (AP) and pleaded that even when the genuineness of the payment as well as identity of the payee was establ....
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.... in nature keeping in view the Circular of the CBDT No. 220 dt, 31st May, 1977, the ITO should not disallow such payment by invoking the s. 40A(3). In CIT vs. Satish Chandra (1983) 34 CTR (All) 321: (1983) 143 ITR (All), the Allahabad High Court in a case where the payees insisted on cash payment and filed certificates to this effect, the Hon'ble High Court held that the payment being not in doubt, the same could not be disallowed under s. 40A(3). Similarly, in CIT vs. Sawaran Singh Balbir Singh (1981) 20 CTR (P & H) 131 : (1982) 136 ITR 595 (P&H), the Punjab and Haryana High Court in a case where the payments were genuine and the identity of the payee stood established and where there was an oral agreement for the payment to be made in cas....
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....nt year. The assessee has got a branch in Muscat, profit of this branch office of June 1985 ending was accounted for by the assessee in the asst. yr. 1987-88 and not in asst. yr. 1986-87. The assessee's accounting year ends on 30th June. The ITO was of the view that since the assessee's accounting year ends on 30th June, 1985, for the asst. yr. 1986-87 any income according upto 30th June, 1985 is assessable to tax in the asst. yr. 1986-87 and not in subsequent year. Consequently, for all the three years in question the income accruing upto 30th June, 1985, 30th June, 1986, 30th June, 1987 from branch office was brought to tax by him in the relevant assessment years. The plea of the assessee that it did not have the relevant information rega....
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....s paid in all the three assessment years. During survey operations, it was found that this employee was away to America for medical treatment, the ITO was of the view that the employee had not rendered any services and that the genuineness of this payment was also doubtful. He accordingly, after applying s. 40A(2)(b) disallowed Rs. 13,380 in each of the three assessment years. On appeal, this disallowance was confirmed by the CIT (A). 9. We have heard the parties and have gone through the salary sheets of each year placed on record. We find that Mr. Z.M. Kadri has a regular employee of the assessee and that on the salary paid to him the assessee has also deducted tax at source. There is, therefore, no material on record to suggest that the....
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....thin the limits or ceiling provided under s. 40 (c), made a disallowance of Rs. 65,000 in each of the three years by holding that the total emoluments received by her were not commensurate with the services rendered by her and hence unreasonable. The following items were taken into account by the CIT(A). Salary Rs. 17,900 Society Maintenance Expenses Rs. 24,000 Electricity Charges Rs. 16,264 taken for personal user Rs. 7,065 One fourth depreciation on car Rs. 7,800 M/s. Kadri Consultants (P) Ltd. . Asst. yrs. 1986-87, 1987-88 & 1988-89 Repairing and maintenance of premises . total debited Rs. 11,308 Rs. 5,000 Telephone and postage debited Rs. 51,252 for personal taken at Rs. 4,000 Club expenses separately not available....