Business Disallowance Cash Payment to Producer of MeatWhether Disallowable Under Section 40A(3) in Absence of Certificate from Veterinary Doctor

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The Tax Publishers Business Disallowance Cash Payment to Producer of Meat--Whether Disallowable Under Section 40A(3) in Absence of Certificate from Veterinary Doctor CA. Nisha Bhandari Recently the Bombay High Court in Pr. CIT v. Gee Square Exports ITA No 1224 of 2015, 13-3-2018 [ 2018 TaxPub(DT) 1393 (Bom-HC)] reiterated the view that the CBDT cannot impose additional condition to the Act or Rules which is adverse to an assessee. The present write-up aims at discussing the said position in context of disallowance under Section 40A(3), read with Rule 6DD(e)(ii). 1. Cash payment exceeding Rs. 10,000 disallowable under Section 40A(3) As provided under 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 payeee cheque drawn on a bank or account payeee bank draft, or use of electronic clearing system through a bank account, exceeds ten thousand rupees, no deduction shall be allowed in respect of such expenditure. However no disallowance shall be made in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors. Rule 6DD specifies such cases and circumstances. 2. Payments to a cultivator, grower or producer towards purchase of agricultural or forest produce--one of the exception provided via Rule 6DD SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Business Disallowance

Cash Payment to Producer of Meat--Whether Disallowable Under Section 40A(3) in Absence of Certificate from Veterinary Doctor

CA. Nisha Bhandari

Recently the Bombay High Court in Pr. CIT v. Gee Square Exports ITA No 1224 of 2015, 13-3-2018 [ 2018 TaxPub(DT) 1393 (Bom-HC)] reiterated the view that the CBDT cannot impose additional condition to the Act or Rules which is adverse to an assessee. The present write-up aims at discussing the said position in context of disallowance under Section 40A(3), read with Rule 6DD(e)(ii).

1. Cash payment exceeding Rs. 10,000 disallowable under Section 40A(3)

As provided under 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 payeee cheque drawn on a bank or account payeee bank draft, or use of electronic clearing system through a bank account, exceeds ten thousand rupees, no deduction shall be allowed in respect of such expenditure. However no disallowance shall be made in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors. Rule 6DD specifies such cases and circumstances.

2. Payments to a cultivator, grower or producer towards purchase of agricultural or forest produce--one of the exception provided via Rule 6DD