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II. Direct Tax Case laws:
1. Anupam Tele Services vs. ITO, Tax Appeal No. 556 of 2013, Gujarat High Court.
S.
40A(3) and Rule 6DD are not intended to restrict business activities.
Considerations of business expediency and other relevant factors are not
excluded. Genuine and bona fide transactions are not taken out of the
sweep of the section.
Held that
The paramount consideration of Section 40A(3) is to curb and reduce the
possibilities of black money transactions. As held by the Supreme Court
in Attar Singh Gurmukh Singh [Supra], section 40A(3) of the Act does
not eliminate considerations of business expediencies.
In the present case, the appellant assessee was compelled to make
cash payments on account of peculiar situation. Such situation was as
follow:
i] the principal company, to which the assessee was a distributor,
insisted that cheque payment from a cooperative bank would not do, since
the realization takes a longer time;
[ii] the assessee was, therefore, required to make cash payments only;
[iii] Tata Teleservices Limited assured the assessee that such amount
shall be deposited in their bank account on behalf of the assessee;
[iv] It is not disputed that the Tata Teleservices Limited did not act on such promise;
[v] if the assessee had not made cash payment and relied on cheque
payments alone, it would have received the recharge vouchers delayed by
4/5 days and thereby severely affecting its business operations.
That the payments between the assessee and the Tata Teleservices
Limited were genuine. The Tata Teleservices Limited had insisted that
such payments be made in cash, which Tata Teleservices Limited in turn
assured and deposited the amount in a bank account. In the facts of the
present case, rigors of section 40A(3) of the Act must be lifted.
(Please click here to view Judgment)
2.
Commissioner of Income-tax, Rajkot –II v. M.B. Patel, Tax Appeal no. 750
OF 2013, Date of Order :15.10.2013, High Court of Gujarat
Whether
where genuineness of documents evidencing purchase of machineries by
assessee was not doubted, any addition treating said purchase as
undisclosed investment could be made to assessee's income.
Held No.
Held that
the purchase of 2 JCB machines were made from Yantraman Automac Pvt.
Ltd., Baroda and both these purchases were on hypothecation with
Centurion Bank of Punjab. The purchase bills also reflected
hypothecation with the Bank. The Tribunal also noted that the books of
account were audited under section 44AB and the Tax Audit Report under
the said provision had been duly furnished before the Assessing Officer,
which was also evident from the assessment order. Thus, having noted
the audited books of account in accordance with the provision of law
being section 44AB and the availability of the funds in the
balance-sheet filed on 31.3.2007, the Tribunal noted that the Tax
Auditor did not point out any discrepancy in the entire report. Not only
the purchase bills filed by the assessee reflected such hypothecation
with the Bank but the repayment schedule also was furnished before the
Assessing Officer. Hence, the Tribunal was of the opinion that in the
event of any doubt, the Assessing Officer could have verified further
those details and accordingly, it had deleted such amount. We are in
complete agreement with the order of Tribunal.
(Please click here to view Judgment)
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