The assessee trust had paid certain amount in cash for purchase of land for development. The AO disallowed 20 per cent of the said sum u/s.40A(3) of the Act. The Tribunal held that, the payment was towards purchase of land, capital expenditure is not charged to profit & loss account hence disallowance was held to be not justified .(AY. 2007 – 08 , 2009 -2010)
Shalom Charitable Ministries of India v. ACIT (2018) 171 ITD 338/ 195 TTJ 340 /( 2019) 177 DTR 22(Cochin) (Trib.)
S. 40A(3) :Expenses or payments not deductible – Cash payments exceeding prescribed limits -Purchase of land -Capital expenditure is charged to profit and loss account -Disallowance cannot be made .