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TMI Blog2017 (2) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... ome tax Act, 1961 (hereinafter referred to as the Act ) for AY 2011-12 vide his order dated 21.03.2014. 2. The only issue to be decided in this appeal is as to whether the ld CITA is justified in upholding the disallowance made u/s 40A(3) of the Act in the facts and circumstances of the case. 3. The Assessee is carrying on business as licensee of Country Spirit shop. The Country Liquor is an excisable commodity. Its purchase and sale are strictly controlled by the State Government. Previously, the retail dealers like the Assessee used to deposit the cost price, excise duty, bottling charges etc. in the Treasury against Form TR-7 in cash for getting supplies from the wholesale Licensee. Subsequently, the Excise Department by a notification dated 29.08.2005 changed the procedure. As per the revised procedure prescribed by the Excise Department, for lifting Country Spirit, the assessee, who is a retail vendor, was required to make the entire payment consisting of cost of the stock-in-trade, Excise duty and bottling charges etc. only to the wholesale Licensee appointed by the State Government. Following the revised procedure, the Assessee made payments by cash deposits in the Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 185-186/Kol/2014 for the Asst Years 2007-08 , 2008-09 2010-11 respectively dated 5.8.2016 , wherein on similar facts, this tribunal had held that the assessee s case falls under the exceptions provided in Rule 6DD(b) and Rule 6DD(k) of the Rules and accordingly deleted the disallowance u/s 40A(3) of the Act. He stated that this order had duly considered the various decisions on the impugned issue and the notification by the Excise Department of Government of West Bengal. Accordingly he pleaded for deletion of disallowance made in the sum of ₹ 29,73,086/-. However, in respect of other cash payments in the sum of ₹ 3,48,392/- made to M/s United Spirits Ltd, he fairly conceded that the same is in violation of section 40A93) of the Act and accordingly disallowance thereon deserves to be confirmed. In response to this,the ld DR placed reliance on the orders of the lower authorities. 6. We have heard the rival submissions and perused the materials available on record. We have also gone through the provisions of The West Bengal Excise Rules 2005 and The Bengal Excise Act, 1909. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined in the Act, shall have the meanings respectively assigned to them in the Act. 3. Issue only on payment of duty.-No country spirit in labelled and capsuled bottles shall be issued without payment of duty from a country spirit bottling plant. No country spirit in bulk shall be issued without payment of duty from a country spirit warehouse. 4. Personal Ledger Account to be maintained by the wholesale licensee.-The wholesale licensee shall maintain a Personal Ledger Account in accordance with the direction issued by the Commissioner from time to time for the purpose of maintaining an account-current of the duties payable by the wholesale licensee for the issues of country spirit to the retail vendors or transport on payment of duty from the concerned country spirit bottling plant or warehouse. 5. Minimum balance in Personal Ledger Account.-The Collector shall issue directions for maintaining the minimum amount of balance in the aforesaid Personal Ledger Accounts in order to ensure that duty for daily issues of country spirit from the country spirit bottling plant or warehouse may be debited from the said account, leaving sufficient balance as may be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler shall submit a bill in duplicate to the Officerin- Charge of the warehouse claiming refund of the amount granted as rebate. The Officer-in-Charge shall, on receipt of the bill, refund the amount claimed after verifying his records through adjustment in the Personal Ledger Account maintained for the purpose of privilege fee. In case there is no Personal Ledger Account for privilege fee at the warehouse, the Officer-in-Charge shall send a copy of the claim with his comments to the Officer-in-Charge of the supplier bottling plant, who shall refund the amount recommended to the wholesaler through adjustment in the Personal Ledger Account maintained for privilege fee. 7. We find that the reliance placed on the decision of Co-ordinate Bench of Bangalore Tribunal in the case of Sri Renukeswara Rice Mills vs ITO reported in 93 ITD 263 (Bang Trib.) is well founded , wherein, it was held that the cash payment in the bank account of the payee is sufficient to get exemption in terms of Rule 6DD in as much it is ensured that the payee and payee alone receives the payment and the origin and conclusion of the transaction is traceable thereby fulfilling the criterion for ensurin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established for supply of country spirit to retail vendors (assessee herein) only and not to anybody else. It would be pertinent to look into the definition of Wholesale licensee as per Rule 2(viii) of the Excise Rules 2005 as below:- Rule 2(viii) Wholesale licensee means the wholesale vendor of country spirit to whom licence has been granted in West Bengal Excise Form No. 26. It would be pertinent to look into Section 22 of The Bengal Excise Act, 1909 at this juncture as below:- Section 22 Grant of exclusive privilege of manufacture and sale of country liquor or intoxicating drugs (1) The State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege (a) of manufacturing, or supplying by wholesale, or (b) of manufacturing, and supplying by wholesale, or (c) of selling, by wholesale or retail, or (d) of manufacturing or supplying by wholesale and selling retail, or (e) of manufacturing and supplying by wholesale and selling retail, any country liquor or intoxicating drug within any specified local area: Provided that public notice shall be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorized retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its Authorised Wholesaler Licensee (Agent), both defacto and dejure , is one of Principal and Agent . We hold that the assessee retail vendor had made payment to the said agent (wholsesale licensee) would fall under the exception provided in Rule 6DD(k) of the Rules. 24. We hold from the aforesaid findings that the assessee s case falls under the exceptions provided in Rule 6DD(b) and Rule 6DD(k) of the Rules. In view of the aforesaid facts and circumstances and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in deleting the disallowance made u/s 40A(3) of the Act in all the years under appeal. Accordingly, the grounds raised by the assessee for all the years under appeal are allowed. 10. Respectfully following the aforesaid decision, we hold that the assessee s case falls under the exceptions provided in Rule 6DD(b) and (k) of the Rules and accordingly, no disallowance u/s 40A(3) of the Act could be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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