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Tax Publishers Ramlord Apparels v. Asstt. CIT [ITA No. 7349/Mum./2018, dt. 3-9-2020] : 2020 TaxPub(DT) 3540 (Mum-Trib) Section 40A(3) applicability on spend in cash outside India *Facts:* Assessee had spent amounts in foreign currency cash more than Rs. 20,000 in when they were abroad for certain exhibitions. This was subject to disallowance under section 40A(3) by lower authorities. Aggrieved assessee went in higher appeal to ITAT - Held against the assessee that the disallowance under section 40A(3) would extend to foreign currency payments in cash if they exceeded Rs. 20,000 threshold. That the spend being done outside India the premise that it cannot be brought in the scope of the section would be incorrect. A reading thus would mean a resident getting penalized for cash spend more than Rs. 20,000 on a single day to a person in India vis-a-vis a person who is outside India despite spending more than this threshold going scot free thus being discriminatory which could have not been the intention of the law. The application of rule 6DD will also not help the assessee as there are alternatives other than cash which assessee do not peruse to make these payments. *Editorial Note:* while the principles enshrined are correct in the decision -- a purposive interpretation of the section with a factual proof of spend being manifested with no mala fide intent should have certainly helped the assessee.

Tax Publishers

Ramlord Apparels v. Asstt. CIT [ITA No. 7349/Mum./2018, dt. 3-9-2020] : 2020 TaxPub(DT) 3540 (Mum-Trib)

Section 40A(3) applicability on spend in cash outside India

Facts:

Assessee had spent amounts in foreign currency cash more than Rs. 20,000 in when they were abroad for certain exhibitions. This was subject to disallowance under section 40A(3) by lower authorities. Aggrieved assessee went in higher appeal to ITAT -

Held against the assessee that the disallowance under section 40A(3) would extend to foreign currency payments in cash if they exceeded Rs. 20,000 threshold. That the spend being done outside India the premise that it cannot be brought in the scope of the section would be incorrect. A reading thus would mean a resident getting penalized for cash spend more than Rs. 20,000 on a single day to a person in India vis-a-vis a person who is outside India despite spending more than this threshold going scot free thus being discriminatory which could have not been the intention of the law. The application of rule 6DD will also not help the assessee as there are alternatives other than cash which assessee do not peruse to make these payments.

Editorial Note: while the principles enshrined are correct in the decision -- a purposive interpretation of the section with a factual proof of spend being manifested with no mala fide intent should have certainly helped the assessee.