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TMI Blog2020 (3) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... on as directed by the learned CIT(A). Therefore,the corresponding grounds of the assessee on this issue fail. Addition u/s 40A(3) - Proof of single payment,which is exceeding ₹ 20,000/- - HELD THAT:- Expenditure incurred under the head Pooja expenses , gift purchases for Ayudha pooja,cash purchases,Sivaranjini Contractor ,could be allowed as business expenditure,towards which incurring of cash expenditure could be justified. Therefore,we direct the A.O. to allow these expenses. With regard to payments made under the following heads,Rajshree Associates-labour contractors,Emmkay Associates-labour contractors,Pachyappan-Masonary,Sivaranjini Contractor,Shanugam-centring,since the assessee is not able to establish that these payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompleted the assessment. Aggrieved,the assessee filed an appeal before the CIT(A). The Ld CIT(A) dismissed the appeal. Aggrieved against that order,the assessee filed this appeal. 3. The assessee has taken various grounds in the grounds of appeal. However,at the time of hearing,the assessee argued on the following issues only and hence,each of the issues is narrated below and disposed off accordingly. 4. The Ld. A.R. submitted that the assessee made interest free advances to its sister concern,M/s.Rajkham Infra P. Ltd.,during the year under consideration were utilized solely for the purpose of benefiting the business of the assessee. The assessee and its sister concern were in the same business and hence,there is no question of divers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas its subsidiary has not done any contract work or supply of goods or materials to the assessee company. Further,the assessee company has not produced any evidence to show that it has benefitted in any way from the funds advanced to its sister concern. When the A.O. perused the P L A/c,he noticed that the assessee company has disclosed a meager profit of ₹ .10.41 lakhs from its operations,which is just 1.24% only. Therefore,the A.O. held that one of the reasons for such low profit is on account of higher interest cost to the assessee. Had there been no diversion of interest bearing funds to its sister concern,the assessee must have disclosed the higher profit. Therefore,the A.O. held that there is no commercial expediency in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to verification as directed by the learned CIT(A). Therefore,the corresponding grounds of the assessee on this issue fail. 7. The next issue is relating to disallowance of ₹ .4,56,471/- under Section 40A(3) of the Act. During assessment proceedings,the A.O. on verification of the cash book of the assessee has identified the following items for disallowance. Nature of expenditure Amount in ₹ Pooja expenses 21,763 Gift purchase for Ayuda Pooja 57,828 Payment to Emmkay Associates labour contractors 1,18,190 Payment to Rajshree Associates Labour C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er contra,Ld. D.R. supported the orders of the lower Authorities. 9. We have heard the rival submissions and perused the material available on record. We find that the expenditure incurred under the head Pooja expenses ,gift purchases for Ayudha pooja,cash purchases,Sivaranjini Contractor ,could be allowed as business expenditure,towards which incurring of cash expenditure could be justified. Therefore,we direct the A.O. to allow these expenses. With regard to payments made under the following heads,Rajshree Associates-labour contractors,Emmkay Associates-labour contractors,Pachyappan-Masonary,Sivaranjini Contractor,Shanugam-centring,since the assessee is not able to establish that these payments did not attract the provisions of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred wholly and exclusively for the purpose of business and hence,they are allowable as an expenditure under Section 37 of the Act. Hence,Ld. A.R. pleaded that the assessee s plea may be allowed. On the other hand,Ld. D.R. supported the orders of the lower Authorities. 11. We have heard the rival submissions and perused the material available on record. We find that the assessee has incurred the impugned expenses wholly and exclusively for the purpose of business and hence,the disallowance made by the A.O is not warranted. Therefore,we direct the A.O to allow the expenses claimed by the assessee under Section 37 of the Act. Corresponding grounds of the assessee are allowed. 12. In the result,the appeal of assessee is partly allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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