Electricity Bill paid in Cash

A Company has deposited Electricity Bill to the State Electricity Board in Cash. The A.O , while doing the Assessment , has disallowed the same. Kindly provide some case laws and oblige.

Replies (7)
Is the payment made on a bank holiday or in a specific area where banking facility was not available? Only then the expenses will be allowed. Otherwise there are no specific case laws for reversing the Cash expenditure
Payment made to CG or State Government undertakings are not covered under 40A(3) dis-allowance.
Payment to CG or SG Undertakings will not be covered only when the payment is required to be made in legal tender i.e.Cash in this case. As electricity board doesn't require to pay in cash this exclusion doesn't apply in this case
Section 40A(3) not applies to cash payment exceeding Rs. 20000 made to Government controlled electricity distribution company

West Bengal State Electricity Distribution Company Limited (WBSEDCL) is covered by the exception Rule 6DD(b) of the IT Rules and as such no dis-allowance under section 40A(3) of the Act can be made. Therefore, the grounds raised by the assessee are allowed.

Narayan Rice Mill Vs. CIT (ITAT Kolkata)

Here it is state Electricity Board.

Payyment of electricity bills to SEB is held to be the payment made to the government for the purpose of section 40A(3) of the Income-tax Act and therefore said section 40A(3) cannot be invoked and no addition is called for and additions so made and confirmed by the ld. CIT(A) is directed to be deleted.

Sumit Industries Vs. ITO (ITAT Jodhpur)
As per section 40A (3) r. w. r. 6DD, payments made to government agencies are exceptions and no disallowance can be made
Very well explained Kapadia Sir...
👍 Shivam

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