Law: Income Tax Act, 1961

Section: 40,40(A)(3)

(a) Income-tax--Business expenditure---Payment of market fees to Market Committee--­Payment exceeding Rs.2,500 by cash disallowed by ITO ---Miscellaneous application by -assessee before Tribunal enclosing letter from Market Committee that committee not prepared to accept crossed cheque---Tribunal's finding that letter was afterthought and rejecting it and affirming decision of ITO ---In view of finding of fact by Tribunal no interference is called for--­Payment exceeding Rs.2,500 by cash is to be disallowed---Indian Income Tax Act, 1961, S.40A(3)---Indian Income Tax Rules, 1962, R.6DD(j). (b) Income-tax--- ----Business expenditure---Deduction allowable only on actual payment--­Interest payable under Haryana General Sales Tax Act, 1973, treated as deemed tax for purpose of collections and recovery under that Act--Not a tax within the meaning of S.43B of Income-tax Act---Section 43B not applicable to provision made for such interest---Indian Income Tax Act, 1961, S.43B. While completing the assessment, the Income-tax Officer had disallowed the payment of market fees where the payments were made in cash to the Market Committee, Sirsa, Haryana, by invoking the provisions of section 40A(3) of the Income Tax Act, 1961. This was upheld by the Commissioner of Income-tax (Appeals) as well as the Tribunal. The Tribunal found that the assessee had not satisfied the conditions laid down in the Rules. The Tribunal also rejected the assessee's application producing a letter from the Market Committee to the effect that the Committee was not prepared to accept the payment by cheque as an afterthought. On a reference: Held, that in view of the finding of fact by the Tribunal no interference was called for. The payments exceeding Rs.2,500 by cash were rightly disallowed. The Income-tax Officer had also disallowed a sum of Rs.41,666 representing provision .made for liability for interest payable to the Haryana Government on arrears of purchase tax by invoking section 43B of the Income Tax Act, 1961. But the Appellate Tribunal deleted this disallowance accepting the assessee's contention that section 43B of the Act was inapplicable to such interest. On a reference: Held, that…

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