Law:

Section:

I. Section 40A(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments - Assessing Officer disallowed certain cash payments alleged to have been made by assessee as tractor charges to one 'D', on ground of assessee's failure to produce said 'D' - On appeal, Commissioner (Appeals) and Tribunal recorded a concurrent finding of fact that Assessing Officer neither made efforts of collecting any material to ascertain genuineness of payment, nor did he consider it just and appropriate to summon said 'D' in exercise of authority vested in him under section 131 - Whether, on facts, Tribunal was justified in deleting addition - Held, yes II. Section 40A(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments - Assessee had paid certain amount to proprietary concern of his son on account of truck hire charges at rate of Rs. 70 per truck and claimed deduction of same - Assessing Officer, invoking provisions of section 40A(2)(b), disallowed said payment holding that charges should have been paid on monthly basis and not on truck basis ; and that by making payment on truck basis, favour had been shown by assessee to his son - On appeal, Commissioner (Appeals) as well as Tribunal deleted disallowance noticing fact that assessee had paid truck charges to other company 'M' at rate of Rs. 80 and Rs. 70 per truck and said payment had been accepted by Assessing Officer as a valid and genuine payment - Whether, on facts, Tribunal had taken a correct view - Held, yes III. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee paid a sum of Rs. 20 lakhs to one 'A' on account of use of its excavator for a period of three months and claimed deduction of same - Assessing Officer disallowed deduction on grounds that cost of excavator was Rs. 40 lakhs and as such payment of Rs. 20 lakhs as hire charges for three months was highly excessive; and that assessee had failed to establish that said expenditure had actually been incurred - Assessee filed confirmations ..of manager of firm 'A' confirming that aforesaid expense had been incurred by assessee for excavation work executed by…

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