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TMI Blog1985 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 40A(3) of the IT Act. The ITO found that cash payment of Rs. 11583 had been made to M/s. Rameshchand Somchand Mansa and Rs. 14,645 to M/s. Rathio Gum Industries. In respect of the former, the assessee furnished a letter from the Agent of SBBJ, Sanchore that during the year 1978-79, drafts of more than Rs. 5000 were not issued for the branch at Mansa. Since Bank draft was the only method by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below. In this behalf Mr. Ranka took us through the entire history of s. 40A(3) which, according to him, had also been looked into by the Hon'ble Rahasthan High Court in M/s. Kantilal Purshottam and Co. vs. CIT in DB IT Ref. No. 8 of 1975 decided on 29th Feb., 1985, since reported in (1986) 53 CTR (Raj) 190. Therein their Lordships have gone through the relevant provisions of s. 40A(3), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction. Further, I propose to provide that payments made in amounts exceeding Rs. 2,500 after a date to be notified later will be allowed as a deduction only if these are made by crossed cheque or by Bank draft." According to their Lordships the very purpose of introducing this section was a check over the dishonest assessees who wanted to claim false deductions on account of expenditure incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat particular case, the genuineness of the payment had been established and notwithstanding the fact that there was technically breach of the provisions of s. 40A(3), the assessee was held entitled to the benefit the exemption under cl. (f) and (j) in respect of payments made for purchase of good from other traders in the course of business. Relying upon this case and some other decisions on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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