Hon'ble Subhash Chandra Nigam,J.
(Delivered by Hon. Rajes Kumar, J.) Heard Sri A.N. Mahajan, learned Standing Counsel and Sri Amitab Agrawal, learned counsel appearing on behalf of respondent.
The following substantial questions of law have been raised in the memo of appeal:
(1)"Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the disallowance made under Section 40-A (3) ignoring the facts that amounts in cash exceeding Rs.20,000/- had been paid by the Assessee company to acquire the Stock-in-Trade?"
(2)"Whether on the facts and circumstances of the case, the Tribunal is justified in holding that the disallowance could be made only if the payments in question relate to expenses incurred by the assessee and not otherwise?"
The Tribunal has deleted the addition under Section 40A(3) of the Income Tax Act (hereinafter referred to as the "Act") on the ground that the payments above Rs.20,000/- was made in cash in respect of those expenditures which were not claimed as a deduction in the profit and loss account and since no deduction has been claimed in the profit and loss account, the provisions of Section 40A(3) of the Act do not apply.
We do not find any error in the order of the Tribunal. Section 40A(3) of the Act reads as follows:
Section 40A(3) "Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure."
A bare perusal of Section 40A (3) of the Act shows that it contemplates disallowance of the expenditure which is claimed as a deduction in case payment is made in cash exceeding Rs.20,000/-. In case if any amount is not claimed as deduction the question of its disallowance does not arise. The Tribunal held that the impugned amount has not been claimed as deduction in profit and loss account and therefore, the provision of Section 40A (3) does not apply. We are of the view that the Tribunal has rightly held so.
In the result, the appeal fails and is dismissed.
Order Date :- 7.1.2010 OP