Where assessee paid cash for certain
expenses in excess of limit prescribed under Section 40A(3) and, consequently,
it was added back to income of assessee, it would be treated as income from
undertaking and, thus, would be eligible for deduction under section 80-IB.
Facts
a)
Assessee, eligible
for deduction under section 80-IB, made payment in cash for certain expenses in
violation of section 40A(3). Consequently, the Assessing Officer (AO)
disallowed said payments.
b)
Assessee filed an
unsuccessful appeal before the CIT(A). The contention of the assessee was that,
though the expenses were disallowed under Sec. 40A(3) and would be added back
to gross total income, deduction under section 80-IB was allowable on same.
c)
Aggrieved by the
order of the CIT(A), assessee filed the instant appeal before the tribunal.
The tribunal held in favour of
assessee as under-
1)
The provisions of
section 40A(3) have been framed in order to curb the transactions in cash and
to encourage the banking transactions.
2)
It was observed
that no aspersions had been cast on the genuineness of the expenses incurred by
assessee. Thus, the argument of the assessee was correct that the addition would
enhance the income earned from the undertaking, therefore, he was eligible for
deduction under section 80-IB- [2016] 69 taxmann.com 130 (Chandigarh - Trib.)
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