IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 18.08.2009 CORAM THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA AND THE HONOURABLE MRS.JUSTICE R.BANUMATHI Tax Case (Appeal) No.766 of 2009 Commissioner of Income Tax Salem .. Appellant -vs- B.G.Subramaniam .. Respondent Memorandum of Grounds of Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras 'D' Bench dated 7.3.2007 made in ITA No.1770/Mds/2005 for the assessment year 2002-2003. For Appellant :: Mr.J.Narayanasamy JUDGMENT (Judgment of the Court was delivered by F.M.IBRAHIM KALIFULLA, J). The revenue has come forward with this appeal and the question of law raised is "whether in the facts and circumstances of the case, the Tribunal was right in holding that no disallowance under Section 40A(3) can be made where the assessee had admittedly made payment exceeding Rs.20,000/- other than by way of crossed cheque?" 2. The assessee succeeded before the Commissioner of Income Tax (Appeals). The appeal preferred by the revenue before the Tribunal having been held against the revenue, the present appeal has been filed. 3. We heard Mr.J.Narayanasamy, learned standing counsel for the appellant. The learned counsel would contend that in the facts and circumstances of the case, the contention of the assessee that he was compelled to deposit the sum in excess of Rs.20,000/- by way of cash at the insistence of the Co- operative Sugar Mill where he purchased the sugar cannot be accepted. 4. The proviso to Section 40A(3) reads as under:- "Provided further that no disallowance under this sub-section shall be made where any payment in a sum exceeding twenty thousand rupees is made otherwise than by an account payee cheque drawn on a bank or account payee bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency' and other relevant factors." 5. If we apply the specific stipulations contained in the proviso, we find that it depends upon the nature and extent of banking facilities available, considerations of business expediency and other relevant factors in order to enable an assessee to claim the deductions. In the case on hand, the Tribunal has noted that the payments were made at the insistence of the Sugar Mill from where the purchases were made by the assessee. Purchases were said to have been made from the District Co- operative Sugar Mill, which is a quasi Government concern, and the payments were also made in the branches of the co-operative banks which were located in the concerned Co-operative Sugar Mill. In such circumstances, the conduct of the assessee in having deposited the payment in cash in the branches located in the Co-operative Sugar Mill at the insistence of the concerned Sugar Mill will squarely fall under the expression 'considerations of business expediency'. When the Commissioner of Income Tax (Appeals) as well as the Tribunal were convinced of the said position, namely, the application of the proviso to Section 40A(3) of the Act, we do not find any question of law, muchless substantial question of law involved in this appeal. The perception of the Commissioner of Income Tax (Appeals) as well as the Tribunal while applying the proviso to Section 40A(3) was perfectly in order, which was based on the special circumstances involved in this case. We, therefore, do not find any scope to entertain this appeal. The appeal fails and the same is dismissed. ss To 1. The Income Tax Appellate Tribunal Madras 'D' Bench Chennai 2. The Commissioner of Income Tax Salem