Section 40A of Income Tax Act, 1961— Disallowance u/s 40A(3)— As per view of assessee AO as well as CIT(A) both have erred in invoking/adding the impugned disallowance of cash payment u/s. 40A(3) of the Act.

There is no dispute about assessee’s carrying on licensed bookmaker’s business with RCTC and therefore, he made the impugned cash payment to the said club only as ‘ operational charges’ has nowhere been doubted. The said operational charge relate to setting on horse racing conducted in the club on Saturdays/Sundays/Holidays only.

The bookmakers have to pay operational charges in relation to previous day(s) horse racing next day & prior to commencement of the day(s) rates. Learned Departmental Representative fails to dispute that non compliance of this agreement clauses attracts appropriate action against book makers. It therefore emerges that all these clinching agreement’s conditions only made the assessee to pay operational charges to the club in cash at the earliest in order to avoid appropriate actions.

We delete the impugned section 40A(3) disallowance of Rs. 49,43,544/-.[HARIDAS SOM VERSUS I.T.O. WARD 22 (3)][2019] 17 ITCD Online (8) [KOLKATA]

ideration.[SURYA COMMERCIALS LTD. VERSUS DCIT RANGE 6 KANPUR] [2019] 17 ITCD Online (7) [ITAT LUCKNOW]