ITAT Cochin Judgments — March 2025

The Tribunal noted that the AO's remand report confirmed that all transactions, including cash deposits in Syndicate Bank and Kotak Mahindra Bank, were accounted for in the assessee's books of accounts. The Tribunal found the Ld. CIT(A)'s order allowing the appeal to be reasonable and correct, especially since the revenue failed to produce any evidence to contradict the CIT(A)'s findings. Therefore, the Tribunal upheld the order of the Ld. CIT(A).

The Tribunal allowed the assessee to withdraw the appeal, noting that the Commissioner of Income Tax (Exemption) had reversed his earlier denial and granted approval in Form 10AD. Consequently, the appeal was dismissed as withdrawn.

The Tribunal ruled that Section 40A(3) is not absolute and must be read with Rule 6DD, providing exceptions where the genuineness of the expenditure is not in doubt. Citing judicial precedents and the tax-neutral nature of director's remuneration (as directors offered it as income), the Tribunal held that the disallowance was not justified, directing the AO to allow the deduction.