Income-tax (Sixteenth Amendment) Rules, 2000 - S.O. 806(E) - Income Tax

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) Notification NO. 11476 New Delhi, the 6th September, 2000 INCOME-TAX S.O. 806(E). -In exercise of the powers conferred by section 295 , read with sub-section (3) of section 40A of the Income-tax Act, 1961 (43 of 1961) , the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962 , namely :- 1. (1) These rules may be called the Income-tax (Sixteenth Amendment) Rules, 2000 (2) They shall be deemed to have come into force on the twenty-fifth day of July, 1995 2. In the Income-tax Rules, 1962 , in rule 6DD , after clause (1), the following clause shall be inserted, namely - (m) where the payment is made by an authorised dealer or a money changer against purchase of foreign currency or travellers cheques in the normal course of his business. Explanation.-For the purpose of this clause, the expression authorised dealer or money changer means a person authorised as an authorised dealer or money changer to deal in foreign currency or foreign exchange under any law for the time being in force. [F. No. 142/43/2000-TPL] DEEPIKA MITTAL, Under Secy. Explanatory Memorandum Authorised dealers and money changers are required normally to pay cash against purchase of foreign currency or travellers cheques in the normal course of their business. Rule 6DD of the Income-tax Rules, 1962 prescribes the cases and circumstances in which payments in a sum exceeding the limit fixed under sub-section (3) of Section 40A, may be made otherwise than by a crossed cheque drawn on bank or a crossed bank draft. Prior to the 25th July, 1995, they were taking recourse to clause (j) of rule 6DD which provided for general exception to the said sub-section (3) of Section 40A where the assessee could satisfy the Assessing Officers that payment could not be made through crossed cheque/bank draft due to unavoidable circumstances. However, the said clause was omitted with effect from the 25th July, 1995. This has resulted hardships to authorised dealers and money changers as the Assessing Officers have started making disallowance in these cases under the said sub-section (3) of Section 40A for making payments in cash exceeding ₹ 20,000. In order to remove such hardships, rule 6DD has been amended retrospectively. It is certified that the retrospective effect to the proposed amendment to the said rule 6DD shall not prejudicially affect the interest of any assessee.