When Transaction is Genuine, No disallowance can be made for cash payment under Rule 6DD

Case Law Update

No disallowance can be made for cash payment even if not falling under Rule 6DD when the transaction is genuine and the identity of the payee is known: ITAT, Jaipur

M/s A Daga Royal Arts Vs. ITO, Jaipur

Date of Pronouncement: 15.05.2018

Rule 6DD is not exhaustive. The fact that the transaction does not fall with Rule 6DD does not mean that a disallowance has to be per force made. Further, the second proviso to section 40A(3) refers to “the nature and extent of banking facility, consideration of business expediency and other relevant factors” which means that the object of the legislature is not to make disallowance of cash payments which have to be compulsory made by the assessee on account of business expediency.

Asked on June 4, 2018 in No Category.
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