9911796707
TMI Blog2008 (9) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia) Ltd. vs. CIT [ 2002 (4) TMI 43 - GAUHATI HIGH COURT] , are in support of the case of the assessee. Clause (f)(ii), reproduced in this order, is also very clear by which it has been provided that no disallowance can be made u/s. 40A(3) if the payments are made on account of purchase of animal produce including hide and skin. Undisputedly, the payments are made in respect of animal produce. Therefore, as per cl. (f)(ii) the claim of the assessee is also allowable. We further note that the issue is also covered by the decision in Jt. CIT vs. Al Noor Exports for AY 1997-98. In this case also AO made addition u/s. 40A(3) on account of payment made in cash for purchase of animal produce. CIT(A) deleted the disallowance in view of cl. (f)(ii) of r. 6DD of IT Rules. On second appeal, by the Department, the Tribunal confirmed the order of the CIT(A). Following the decision in the case of Al Noor Exports, we hold that no disallowance can be made u/s. 40A(3) on the facts of the present case. Accordingly, we confirm the order of the ld CIT(A). In the result, the appeal of the Revenue is dismissed. - Member(s) : R. K. GUPTA., K. G. BANSAL. ORDER-R.K. GUPTA, J.M.: Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further brought to your ice that in the books of accounts, the assessee has not shown the payments directly to the grower and producer of animal husbandry but is shown to have made the payments to his agents for the purpose of making payments in cash for the purchase of products of animal husbandry on behalf of the assessee. Such payments are also covered in cl (1) of r. 6DD. The same is also held by the Bangalore Bench of Tribunal in the case of Sri Renukeswara Rice Mills vs. ITO (2005) 93 TTJ (Bang) 912 : (2005) 278 ITR 77 (Bang)(AT)." 3. It was further brought to knowledge of the AO that as per r. 6DD, there are exclusionary conditions as per 7(a) mentioned above. It was further explained that assessee's case falls under exclusionary provision as per r. 6DD. 4. Thereafter the AO discussed the issue in detail and found that provisions of s. 40A(3) are applicable in case of the assessee. Various case laws including the decision of Hon'ble Allahabad High Court in the case of CIT vs. Pehlaj Rai Daryanmal (1992) 104 CTR (All) 214 : (1991) 190 ITR 242 (All) were taken into consideration by the AO, as mentioned at pp. 4 to 8 of his order and ultimately it was concluded that there a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by cl. (f) and cl. (l) of r. 6DD of the IT Rules. Reliance was placed on the decision of Tribunal Bangalore Bench in the case of Sri Renukeswara Rice Mills vs. ITO. After considering the submissions and perusing the material on record the CIT(A) gave following finding recorded in para 3 at pp. 4 to 8: "3. I have considered the submissions of the appellant's and the facts on record. I have also considered the analysis and conclusion drawn in the assessment order. The appellant has pleaded that payments were made in exceptional circumstances within the meaning of cls. (f), (g) and (l) of r. 6DD and hence the corresponding cash payments for purchases are outside the ambit of s. 40A(3). The relevant r. 6DD and the specific clauses referred to by the appellant are as under: Rule 6DD: No disallowance under sub-s. (3) of s. 40A shall be made where any payment in a sum exceeding twenty thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft in the cases and circumstances specified hereunder, namely: (f) where the payment is made for the purchase of- (i) agricultural or forest produce; or (ii) the produce of animal husbandry (inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and a further confirmation from a veterinary doctor certifying that the person specified in the certificate is a producer of meat and that slaughtering was done under his supervision. It is apparent even without the benefit of the circulars which were issued subsequent to the assessment order in this case that exclusion from operation of cl. (f) of r. 6DD is required to be extended in respect of cash payment for purchase of the produce of animal husbandry only if the payment is made to the producer of such produce or products. The decision relied upon by the appellant in the case of Al Noor Exports ITA No. 89/Del/2001 decided by Tribunal Delhi, on 26th Oct., 2004 was on the scope whether the produce of animal husbandry would include live animals or both live animals and meat. The issue in the present appeal does not in any way relate to the issue before the Tribunal in the case of Al Noor Exports. It is held that payments in cash for purchase of produce of animal husbandry insofar as payments have not been made to the producers of such produce or products, are not covered within the provisions of r. 6DD(f)(ii). Insofar as the provisions of cl. (1) of r. 6DD are concerned, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under s. 40A(3) is unjustified. Hence deleted." 8. Now the Department is in appeal here before the Tribunal. 9. The learned Departmental Representative who appeared before the Tribunal, strongly placed reliance on the order of AO. Some of the portion of the order of AO was read also. It was submitted that all the purchases made by assessee are made fromAgra,Mathura, Etah etc. where banking facilities are easily available. The persons from whom the purchases are made are known to assessee, therefore, it cannot be said that purchases have been made from unknown persons and banking facilities are not available. It was further submitted that there was no proper voucher maintained by assessee, neither there was any supporting evidence as only self-made vouchers were filed which were signed by the suppliers. The entire purchases were not verifiable. Therefore, AO was justified in making the disallowance in view of the provisions of s. 40A(3) which are only to the extent of 20 per cent of the total purchases. It was further explained that decision of Bangalore Bench on which reliance has been placed by learned CIT(A) is not applicable on the facts of the present case. In that case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility is not the sole criteria. Other reasons also have to be seen. In the present case as explained earlier that small butchers who come in a group from remote areas in the mandis such asAgra,Mathura, Etah etc. and then they supply goods through their leaders to the assessee and take their payment. Attention of the Bench was drawn on Board's circular where it is clarified that in case of purchases on account of animal husbandry product, no addition can be made in view of provisions of s. 40A(3). Clause (1) of r. 6DD along with two other clauses were read also by the learned Authorised Representative. It was further submitted that reliance has been placed by the AO on the decision of Hon'ble Allahabad High Court which was pronounced in the year 1991 whereas cl. (1) has been inserted in the year of 1995. Therefore, the decision of the Hon'ble Allahabad High Court is not applicable in the year under consideration. Reliance was placed on Hybro Foods (P) Ltd. vs. ITO (2008) 114 TTJ (Mumbai) 392. 11. In reply the learned Departmental Representative again stated that the order of AO is very clear who has examined the issue in detail and no agent has been identified. It was also stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Tribunal, Bangalore Bench in the case of Sri Renukeswara Rice Mills, the CIT(A) allowed the claim of the assessee by observing that cl. (l) was on statute at the relevant point of time when the payments exceeding Rs. 20,000 were made by the assessee in cash. Accordingly CIT(A) rejected the claim under cl. (l) but allowed the claim of the assessee under cl. (l) of r. 6DD. 13.2 The respective clauses of IT Rules under which the claim has been made are cls. (f) and (l) of r. 6DD which read as under: Rule 6DD: No disallowance under sub-s. (3) of s. 40A shall be made where any payment in a sum exceeding twenty thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft in the cases and circumstances specified hereunder, namely: (f) where the payment is made for the purchase of (i).......; or (ii) the produce of animal husbandry (including hides and skins) or dairy or poultry farming; or ....... (l) where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person." 13.3 After going through the contents of the respective clauses, as above, we find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l remains the same and the Tribunal has found that the expenditure disallowed by the lower authorities under one head but found to be admissible under different head. then the Tribunal had jurisdiction to admit that expenditure as a permissible allowance in the computation of taxable income of the assessee even on different basis other than the basis on which such disallowances are made. The Hon'ble Supreme Court has further held that if for reasons recorded by the Departmental authorities in respect of contentions raised by the assessee, grant of relief to him on another ground is justified, it would be open to the Departmental authorities and the Tribunal and indeed they would be under a duty to grant that. The right of the assessee to relief is not restricted to the plea raised by the assessee because the subject-matter of the issue remains the same. 13.8 In case of Assam Company (India) Ltd. vs. CIT (2002) 176 CTR (Gau) 406 : (2002) 256 ITR 423 (Gau), the Hon'ble Gauhati High Court has held that there is no prohibition in the rules totally precluding the Tribunal from considering any ground for the relief, beyond those mentioned in the memorandum of appeal filed by a party in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of disposal of these appeals, we are concerned with cl . (ii) of 6DD(f). The exception for the purpose of invoking s. 40A(3) would be available to the assessee if the payment(s) are made for the produce of animal husbandry (including hides and skins) or dairy or poultry farming to the cultivator, grower or producer of such articles, produce or products. A crucial question raised before us is as to whether r. 6DD(f)(ii) is applicable only in respect of payments made to the producer of live animals or is it also available to the person who has produced and supplied mutton to the assessee. Legally the word "animal" denotes any living creature may be defined as an organism which exhibits five forms of activities-movement, sensation, nutrition, growth and reproduction. The word "husbandry" is applicable to a market garden as to a farm acable or pasture (per Kekowich. J.-Neux vs. Coble 1892 2 Ch 261). Grazing sheep has been held to be a purpose of husbandry in the case of Kekeir vs. Gillespie 1920 SC 67. Keeping in view the above definitions if we were to interpret the word "animal husbandry" only, ignoring the words in r. 6DD(f), then it would mean a reference to the living cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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