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TMI Blog2017 (4) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... on the same day of various amounts aggregating to more than ₹ 20,000/- in cash, the same were allowable as deduction towards expenditure under Section 40 A (3) of the Act. Accordingly, the tribunal committed an error of law in confirming the additions of ₹ 1,28,400/- on account of payment made in cash by taking the aggregate of transactions made to one party in a single day to be over ₹ 20,000/-. - Decided in favour of assessee Disallowing the expenses on account of after sale services and advertisement u/s 37 (1) - no agreement for the reimbursement of the said expenses to the supplier or manufacturer - Held that:- The assessee/appellant is only a distributor. The advertisement expenses and after sale services are g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stions of law arise for consideration in this appeal: (i) Whether the tribunal was legally justified in confirming the addition of ₹ 1,28,400/- on account of payment made in cash even though cash payment only up-to the limit of ₹ 20,000/- alone was permissible under Section 40 A (3) of the Act?; and (ii) Whether the tribunal was justified in disallowing the expenses on account of after sale services and advertisement under Section 37 (1) of the Act merely for the reason that there was no agreement for the reimbursement of the said expenses to the supplier or manufacturer? Section 40 A (3) of the Act as it existed in the relevant assessment year 2001-2002 had two subclauses (a) and (b). The relevant clause (a) of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. The aforesaid amendment provided and restricted the payment in cash to a person in a particular day upto the limit of ₹ 20,000/- for the purposes of claiming deduction in respect of expenditure. This is evident from the use of phrase payment or aggregate of payments made to a person in a day contained in Section 40 A(3) of the Act as amended w.e.f. 1.4.2009. It is settled in law that any amendment of substantive nature in the taxation law is prospective in nature unless it is given retrospectivity. The aforesaid amendment, in the absence of any retrospectivity given to it, is prospective in nature and cannot be applied to the transactions which had taken place prior to its enforcement on 1.4.2009 much less to the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer/supplier. This has been disallowed under Section 37 (1) of the Act for the reason that there is no evidence on record to establish that the manufacturer/supplier had actually incurred any such expenses on after sale services or advertisement and there is any agreement between the parties for its reimbursement. In this regard, submission of Sri Suyash Agrawal, learned counsel for the assessee/appellant is that the assessing authority itself in the past had allowed the above expenses under Section 37 (1) of the Act and that even in the subsequent assessment period has accepted the same. Thus, there is no justification on part of the tribunal for not allowing the above expenses as business expenses for the assessment year, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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