section 40A(3)
This query is : Resolved
17 June 2009
Can anybody mail me copy of SriRenukeswara Rice Mills Vs.ITO (2005)
my mail id is mataniman@yahoo.com.
Regds.
my mail id is mataniman@yahoo.com.
Regds.
Aditya Maheshwari
(Expert)
18 June 2009
If your citation is right then the case belong to Standard Chemicals Co. Ltd. v/s CIT.
Kindly tell the correct citation
Kindly tell the correct citation
19 June 2009
Can anybody mail me copy of SriRenukeswara Rice Mills Vs.ITO (2005)
my mail id is mataniman@yahoo.com.
Regds.
my mail id is mataniman@yahoo.com.
Regds.
23 July 2025
You’re looking for Sri Renukeswara Rice Mills vs. ITO (2005) — a landmark case under Section 40A(3). Here's a detailed summary:
📘 Case Summary – Sri Renukeswara Rice Mills v. ITO (2005)
🔁 Facts:
Assessee (Rice Mill) purchased agricultural produce.
Payments exceeding ₹20,000 were made in cash, but deposited directly into the payee’s bank account, via bank challan—not by debit to the payee’s pocket.
AO disallowed the expenditure under Sec 40A(3) on grounds of cash payment >₹20k.
⚖️ Legal Holding:
The Bangalore Tribunal held in favour of the assessee, stating:
“Payment in cash made directly to bank account of payee … fulfils the intent of Section 40A(3). The origin and conclusion of the transaction are traceable, and the payee alone receives the payment. Hence, no disallowance is warranted.”
taxguru.in
+15
casemine.com
+15
bangaloreicai.org
+15
indiankanoon.org
+1
incometaxquery.com
+1
taxguru.in
caclubindia.com
📌 It emphasized:
The spirit behind Sec 40A(3) is to prevent use of unaccounted money and curb black money, ensuring traceability—not necessarily restrict cash.
A bank-deposit via challan meets this objective under Rule 6DD partially.
✅ Takeaway:
Payment Method 40A(3) Implication
Cash in hand to seller ❌ Disallow deduction if > ₹20K
Cash deposit into seller’s bank ✅ Allow deduction (as per this case)
The ruling provides relief where cash is routed through banking channel, even without an account payee cheque, as long as the transaction remains traceable and paid to the correct party.
📚 Case References:
Sri Renukeswara Rice Mills v. ITO (2005) 93 ITD 263 (Bang-Trib)
caclubindia.com
+2
casemine.com
+2
indiankanoon.org
+2
indiankanoon.org
+6
indiankanoon.org
+6
taxguru.in
+6
taxguru.in
+7
incometaxquery.com
+7
taxguru.in
+7
📘 Case Summary – Sri Renukeswara Rice Mills v. ITO (2005)
🔁 Facts:
Assessee (Rice Mill) purchased agricultural produce.
Payments exceeding ₹20,000 were made in cash, but deposited directly into the payee’s bank account, via bank challan—not by debit to the payee’s pocket.
AO disallowed the expenditure under Sec 40A(3) on grounds of cash payment >₹20k.
⚖️ Legal Holding:
The Bangalore Tribunal held in favour of the assessee, stating:
“Payment in cash made directly to bank account of payee … fulfils the intent of Section 40A(3). The origin and conclusion of the transaction are traceable, and the payee alone receives the payment. Hence, no disallowance is warranted.”
taxguru.in
+15
casemine.com
+15
bangaloreicai.org
+15
indiankanoon.org
+1
incometaxquery.com
+1
taxguru.in
caclubindia.com
📌 It emphasized:
The spirit behind Sec 40A(3) is to prevent use of unaccounted money and curb black money, ensuring traceability—not necessarily restrict cash.
A bank-deposit via challan meets this objective under Rule 6DD partially.
✅ Takeaway:
Payment Method 40A(3) Implication
Cash in hand to seller ❌ Disallow deduction if > ₹20K
Cash deposit into seller’s bank ✅ Allow deduction (as per this case)
The ruling provides relief where cash is routed through banking channel, even without an account payee cheque, as long as the transaction remains traceable and paid to the correct party.
📚 Case References:
Sri Renukeswara Rice Mills v. ITO (2005) 93 ITD 263 (Bang-Trib)
caclubindia.com
+2
casemine.com
+2
indiankanoon.org
+2
indiankanoon.org
+6
indiankanoon.org
+6
taxguru.in
+6
taxguru.in
+7
incometaxquery.com
+7
taxguru.in
+7
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Late Filing Fee Waiver for Q1 Form 144 (Earlier 27Q) – Transition to Income-tax Act, 2025
- GST input credit on commercial property
- Working on Gold wastage during Melting of old gold jewellery
- GST REFUND ISSUE ON PURCHASE OF PLANT AND MACHINERY
- TDS on Dashcam rent and allied services
- GSTR-9C filing
- Import Order Cancelled.
- Form 144 TDS Return Validation Error – Mandatory Fields
- How do you manage client document collection and follow-ups in your CA/CS practice?
- Royalty payments to the Mining Department for procurement of murum - GST input
- Subject: Legal Remedy for Removal of Income Tax Demand for AY 2024–25 – Charitable Trust
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Tally: Imported bank entries do not show up in manual reconciliation
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
