Assessee purchased wine from two entities by making cash payments exceeding Rs. 20,000. Assessing Officer disallowed said payments under section 40A(3). CIT(A) deleted the disallowances. On appeal by Revenue the Tribunal held that both the undertakings were State Government companies wherein 100 per cent shareholding was held by State Government and there was an existence of deep and pervasive control of State Government. Since payments in question were made by assessee to State Government entities by way of legal tender, same were covered by exception contemplated in rule 6DD(b) order of CIT(A) is affirmed. (AY. 2014-15)
DCIT v. Vinod Arora (2022) 194 ITD 605 (Amritsar)(Trib.)
S. 40A(3) : Expenses or payments not deductible-Cash payments exceeding prescribed limits-Payment was made by way of legal tender i.e. Indian currency, said payments were covered by exception contemplated in rule 6DD(b)-Disallowance is not valid [R.6DD(b)] and, therefore, same could not be disallowed under section 40A(3).