13 September 2008
Electricity is an expenditure allowable as deduction U/s 28 to 38 of the I.T.Act. Section 40A(3)provides for disallowance of such expenditure paid in cash exceeding Rs.20000/- and payment of Electricity is not excluded under Rule-6DD. Considering your facts, the AO may exercise his discretion in not making any disallowance considering the business prudence involved in to it. However in such case you may have fair chance of winning the case in Appeal.