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TMI Blog2012 (12) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed upon small businesses and professionals who are engaged in activities and are dependent entirely on timely cash flow. It is in such cases that Rule 6DD - which was formulated as a proviso to Section 40A (3) - steps in to aid such assessees and concerns. In this context, the statutory mandate in Section 6DD (k), at least in the circumstances of the case, has to be so construed as to mean that but for the cash payment, the assessee would have been deprived the benefit of supplies itself. This Court clarifies that the interpretation of the expression “who is required to make payment in cash” having regard to the circumstances of the case is fact dependent, at least in the present case. The consequence of instances of payment through ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee had purchased goods and supplies to the tune of Rs.27,48,860/- from one M/s Shruti Enterprises, a Mumbai-based concern for providing it supplies in the trains which it serves, i.e., Punjab Mail and Pushpak Express. The assessee had urged that purchases from this concern were necessary because one of the trains never touched Delhi and the other train used to halt at Delhi for a limited time. Consequently, it was not possible to load the stock within the short period, necessitating purchase and loading the stock in Mumbai. It was also urged that the Mumbai supplier i.e. M/s Shruti Enterprises insisted for payment in cash against delivery of items and the assessee, having regard to the nature of its contract with the IRCTC was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that supplies would not have been obtained except on cash payments. It was submitted that if cases like the present are permitted and the disallowance is deleted, it would have implications as similar arguments of business expediency would be taken in other cases. 7. The Tribunal while rejecting the assessee's contentions held as follows: - "14. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that assessee's business is surely of a peculiar nature of supplying goods on running trains originating from Mumbai while assessee himself sitting in Delhi. In the modern age there are number of methods available for making payments throughout the country while sitting any wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. (3A) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year (hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees: Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of such persons." 9. In the present case, the previously noted discussion would reveal that the assessee engages itself in executing catering contracts for Railways in respect of two trains. In those trains, its personnel are deployed for sale of small articles of daily necessity and use to the passengers. Per force, the payments received by them are necessarily in cash. These amounts are collected and in turn handed over to the assessee. The assessee in terms of its contract is bound to maintain constant supplies in the trains and ensure that at no point in time can the passengers be deprived of these articles (which are food articles, soft drinks and other items necessary for travel). In the course of such transactions, it sources t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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