The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that direct expenses incurred for the purchase of construction material should not be disallowed under Section 40A(3) of Income Tax Act,1961.
The aforesaid appeal was filed by the revenue against the order of Commissioner of Income Tax (Appeals),who deleted addition made on the direct expense incurred by the bassesee for purchase of construction material.
During the assessment proceedings the Assessing Officer (AO) found that assessee has claimed direct expenses for purchase of construction material.
However AO argued that the assessee could not produce bills of the said expenditure nor the bank account details proving payment by cheque/RTGs. Thus 30% of expenditure is disallowed under Section 40A(3) of Income Tax Act.
Aggrieved assessee filed an appeal before the Commissioner of Income Tax (Appeals). During the proceedings Commissioner of Income Tax (Appeals), deleted the addition on the grounds holding that the books of accounts have been produced before the AO, the payments of amounts in cash over the specified limit has not been established and there was no basis for ad-hoc disallowance of 30%.
Thereafter the revenue filed a second appeal before the tribunal. After considering the submissions the two member bench of B. R. R. Kumar, (Accountant Member) Sh. Yogesh Kumar US, (Judicial Member) confirmed the decision of the Commissioner of Income Tax (Appeals),.
Sourbh Jindal, counsel appeared for the assessee and Ram Dhan Meena, counsel appeared for the assessee
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
