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TMI Blog2013 (9) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... the farmers. Rule 6DD(e) is applicable as exemption where the payment is made for the purchase of agricultural produce from purchaser. Rule 6DD (k) is attracted, where the payment is made by any person through agent, who is required to make payment in cash for goods or services on behalf of such persons - The payments, therefore, could not have been disallowed on the ground of the violation of Section 40A (3) of the Act – Decided against the Revenue. - Income Tax Appeal No. - 207 of 2013 - - - Dated:- 29-8-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Appellant : Dhananjay Awasthi ORDER We have heard Shri Dhananjay Awasthi, learned counsel for the revenue. This appeal under Section 260A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided to 'Arahtiya' or any middlemen by whatever name called. 7. Whether the ITAT has erred in law accepting the applicability of Circular 452 in the case of assessee as this Circular does not deal with the provisions of Section 40-A (3) rather it deals with the applicability of provisions of Section 44-AB of I.T. Act, 1961. 8. Whether the ITAT has erred in law by not appreciating the intent of the Circular No.220 dated 31.05.1997." It is submitted by Shri Dhananjay Awasthi that A.O. had rejected the contention that CBDT Circular No.34 dated 5.3.1970 had made it clear that the payments to 'Arahtiya' are not exempt from the provisions of Section 40A (3). According to the A.O. Rule 6-DD was not applicable to the case. The assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (3) of Section 40A shall be made and no payments shall be deemed to be the profits and gains of business or profession under sub-section (3a) of Section 40A, where a payment or aggregate of payments made to a 'person' in a date otherwise than by an account payee cheques drawn on a bank or account payee bank draft exceeds Rs.20,000/- in the cases and circumstances specified namely:- "(e) Where the payment is made for the purchase of- (i) agricultural or forest produce; or (ii) the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or (iii) fish or fish products; or (iv) the products of horticulture or apiculture to the cultivator, grower or producer of such articles, produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was under business expediency to make cash payment to the 'kachcha Arahtiya'. Certain payments were made directly to the farmers as well as on bank holidays. The CIT (A), therefore, rightly deleted additions. The assessee's reliance on Circular No.220 dated 31.5.1977 in which certain conditions have been laid down for making cash payments and some of the conditions are that when payments are made on bank holidays and the seller had refused to accept the payment by way of cross cheques, the commission agent is required to pay cash in turn to the persons from whom he purchased the goods. All these persons from whom the goods were purchased were farmers, who had purchased these goods. 'Kachcha Arahtiya' obtained the agricultural produce from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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