9911796707
TMI Blog2016 (7) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... respective assessees are directed against the separate orders dated 31-03-2014 of the CIT(A)-II, Pune relating to Assessment Year 2009-10. Since identical grounds have been taken by the respective assessee s, therefore, these were heard together and are being disposed of by this common order. 2. First we take up ITA No.1467/PN/2014 (Smt. Sapna Sanjay Raisoni) as the lead case. Grounds of appeal No.1 to 5 by the assessee read as under : The following grounds are taken without prejudice to each other- On facts and in law, 1] The learned CIT(A) erred in confirming the disallowance u/s. 40A (3) ₹ 84,98,755/- in respect of cash payments made to Maharashtra State Road Transport and other Govt. Organisations towards purchase of scrap without appreciating that the said payments were covered under the exceptions mentioned in clause (b) of Rule 6DD of the Income tax rules and therefore, there was no reason to make any disallowance u/s. 40A(3) in respect of the same. 2] The learned CIT (A) erred in holding that 'Maharashtra State Road Transport ' could not be considered as 'Government' for the purposes of Rule 6DD(b) and hence, the disallowance u/s. 40A(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, this being a covered matter the grounds raised by the assessee should be allowed. 7. The Ld. Departmental Representative on the other hand heavily relied on the order of the AO and the CIT(A). He however submitted that the Tribunal has decided the issue in favour of the assessee. 8. After hearing both the sides, we find the Ld.CIT(A) following his order for earlier years in assessee s own case has confirmed the disallowance of ₹ 84,98,755/- u.s.40A(3) in respect of cash payments made to MSRTC and other Government organizations towards purchase of scrap. We find the Tribunal in assessee s own case after elaborately discussing the issue has deleted such disallowance by holding as under : 8. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The only issue before us for adjudication in these appeals is; Whether the payments made in cash by the assessees to MSRTC for purchase of scrap in auction would attract the provisions of section 40A(3) of the Act ? 9. In the first round of litigation, same question was raised before the Tribunal in ITA No.845 1471/PN/2010, ITA No.836/PN/2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are the instrumentalities of the Government only. 12. The term Government is very much wide under the constitutional set up. Government may be Central or State, or it may be Local Government which is envisaged by our Constitution, like Zilla Parishad, Municipal Corporations, Municipal Councils, Panchayat Samithis, etc. The Public Works Department is part of the Government. In our opinion, this aspect has not been considered by the authorities below and they have closed door to the assessees to make out the case for examination under Rule 6DD. We are, therefore, of the opinion that in the light of our above discussion, the plea of the assessees need reconsideration by the Ld. CIT(Appeals). We, therefore, set aside the issue in respect of the disallowance made u/s.40A(3) to the file of the Ld. CIT(A) to decide the same de novo in the light of our above observations and discussion. Accordingly, the relevant Grounds taken by the assessees in all these appeals are allowed for statistical purposes. Needless to say the CIT(A) is directed to give opportunity of being heard to the assessees as per the principles of natural justice. 10. A bare perusal of Article 12 shows that the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered that it falls within the term State . 12. If these tests are applied on the MSRTC, we observe that the Corporation satisfies majority of the conditions. The entire share capital of MSRTC is owned by State and Central Government. The State has full control over the working, policies and the framework of the Corporation. The Corporation is providing public transport facility to the subjects of the State, even in for remote areas, where sometimes it is not economically viable to provide transport service. Thus, it is providing vital function of public importance. 13. The Hon ble Bombay High Court in the case of Maharashtra State Road Transport Corporation Vs. Diwakar Madhukarrao Malkapure and Others in Writ Petition No.2762/2012 decided on 12-11-2013 while dealing with an issue relating to payment of compensation to one of the employee of MSRTC has observed as under : The Petitioner employer is a body Corporate and is State within the meaning of Article 12 of the Constitution of India and therefore it has to act as a Model Employer. 14. Thus, in view of the facts of the case and in the light of observations of the Hon ble Bombay High Court, we are of the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the person who has received the cash payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule. It will be clear from the provisions of section 40A(3) and rule 6DD that they are intended to regulate business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions. 17. In the case of Gurudev Garg Vs. CIT the Hon ble Punjab Haryana High Court has held that where genuineness of transaction made in cash in excess of ₹ 20,000/- was not disbelieved by the authorities, the same cannot be disallowed u/s.40A(3) of the Act. 18. In view of the facts of the case and the case laws discussed above, we are of the considered view that the provisions of section 40A(3) are not attracted on the cash payments made by the assessees to MSRTC. The provisions of Rule 6DD (b) provide exception to Section 40A(3) where cash payments are made to Government. The aforesaid exception will operate in the case of the assessee. Thus, the CIT(A) has erred in holding that disallowance u/s.40A(3) is to be made in r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
