The AO disallowed the expenses on the ground that the same were more than the limits specified u/s. 40A (3). The CIT (A) upheld the order of the AO as the assessee had failed to establish the identity of the payees and the genuineness of these transactions, and the business expediency with regard to said payments was established. Tribunal held that  disallowances u/s. 40A (3) should be made cautiously, especially when payments are essential for the business operations. If there is no doubt about the identity of the payee and the genuineness of the transactions, the business exigencies should be considered to justify the payments. Further held that if cash payments are made due to the business exigencies and there is no suspicion of tax evasion, then such payments should not be disallowed. Therefore, expenses like fuel, meals, and repairs that are necessary for running the business should not be disallowed just because they exceed the limits of S. 40A(3).(AY. 2008-09, 2014-15)