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TMI Blog2020 (9) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find any specific clause therein which can come to the aid of the assessee. Even, accepting that the assessee could not have issued a cheque to the payee, however, there are many other ways open to the assessee for making the payment through proper banking channel. Since, the assessee has failed to do so, the provisions of section 40A(3) of the Act is clearly attracted and the expenditure incurred in cash deserves to be disallowed. The decisions relied upon by the learned counsel for the assessee, on careful examination, were found to be of no help to the assessee. Accordingly, we uphold the decision of learned Commissioner (Appeals) on the issue while dismissing the ground raised by the assessee. Disallowance of vehicle, conveyance and telephone expenses @ 10% - HELD THAT:- AO has disallowed 10% of the expenditure claimed by the assessee purely on ad hoc basis assuming personal use. However, what is the nature of enquiry conducted by the Assessing Officer to establish personal use is not forthcoming from the assessment order. It is also not clear whether the Assessing Officer has called upon the assessee to furnish evidence that there is no personal element involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the assessee has claimed foreign travel expenses of ₹ 60,07,464, including an amount of ₹ 31,53,902, towards exhibition charges. After calling for the details of expenditure incurred and verifying them, he found that the exhibition charges of ₹ 31,53,902, was incurred in cash in foreign currency abroad. Further, he observed that the assessee could not furnish any details or supporting evidence in support of actual exhibition expense except cash memos obtained from the commission agents to whom the assessee had also paid commission. Referring to the provisions of section 40A(3) of the Act, the Assessing Officer observed, since the assessee has incurred expenses in cash exceeding the amount of ₹ 20,000 in a day, such expense has to be disallowed. After calling for an explanation from the assessee regarding the proposed disallowance and examining it, the Assessing Officer ultimately disallowed the amount of ₹ 31,53,902, under section 40A(3) of the Act. Though, the assessee contested the aforesaid disallowance before the first appellate authority, however, the disallowance made by the Assessing Officer was confirmed. 4. The learned Authorised R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred in cash in foreign countries is actually misplaced as there is no such restriction in the said provision. Further, he submitted, the provision of rule 6DD would also not be applicable to the assessee as none of the exceptions mentioned therein apply. He submitted, though it may not have been possible for the assessee to issue cheque, however, the assessee could have paid the money in various other modes through banking channel instead of paying in cash. Thus, he submitted, disallowance of expenditure under section 40A(3) is justified. 6. We have considered rival submissions in the light of decisions relied upon and perused the material on record. As far as the factual aspect of the issue is concerned, there is no dispute that the assessee has incurred the expenditure in dispute in cash, though, in foreign currency and abroad. It is the case of the assessee that since the provision contained under section 40A(3) of the Act speaks of incurring of cash expenditure exceeding ₹ 20,000, in a day, the provision would apply only in a case where the expenditure in cash has been incurred in Indian currency. Further, it is the contention of the assessee that Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrency is outside the purview of the aforesaid provision. If the aforesaid contention of the assessee is accepted, it will create an anomalous situation, as, an assessee incurring cash expenditure in India exceeding ₹ 20,000 will face the rigors of section 40A(3), whereas, another assessee incurring unlimited cash expenditure abroad in foreign currency would go scot free. This, in our humble view, could not have been the intention of the legislature while enacting section 40A(3) of the Act, as, the provision would otherwise suffer from the vice of discrimination 9. Insofar as the contention of the learned Authorised Representative that the provisions of the Act would be applicable only to the territory of India and not to the expenditure incurred abroad, we are unable to accept the same. Undisputedly, the expenditure incurred in cash has been booked in India by debiting to the profit and loss account, that too, in rupee terms. Therefore, the Assessing Officer has all the powers to examine the allowability of such expenditure under the provisions of the Act while making assessment of the assessee. That being the case, it cannot be said that the provisions of section 40A(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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