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No sec. 40A(3) disallowance if it was mandatory to purchase material in cash to complete construction in time

January 8, 2019[2019] 101 16 (Delhi - Trib.)/[2019] 174 ITD 393 (Delhi - Trib.)

IT : Where assessee developer made payments exceeding Rs. 20,000 for purchase of construction materials on bank holidays, since assessee being developer was bound to complete work in a time bound manner and construction activities were carried out continuously even during holidays, therefore, assessee was required to procure materials on public holidays to avoid break in process of construction, said payments could not be disallowed under section 40A(3)

IT : Where assessee had produced several documentary evidences to show that person to whom payments were made in cash in excess of Rs. 20,000 had acted as agent of assessee for purchase of construction material on behalf of assessee, such payments would fall under exception clause of rule 6DD(k) and, therefore, section 40A(3) would not apply

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