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TMI Blog1991 (3) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... qualify the other clauses mentioned in the said rule ?" The assessee is a registered firm dealing in timber. While scrutinising the accounts for the previous year relevant to the assessment year 1970-71, the Income-tax Officer found that the assessee has made payments for purchase of timber to the extent of Rs. 28,565 to various parties in cash exceeding Rs. 2,500. The assessee admitted that these payments were made at Kanpur. The Income-tax Officer felt a doubt about the identity of the recipients of the said amount. Accordingly, he disallowed the deductions and added back the said amount to the assessee's income. On appeal, however, the Appellate Assistant Commissioner opined that the payments made for purchase of forest produce are exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his sub-section shall be made where any payment in a sum exceeding ten thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors." "Rule 6DD. No disallowance under sub-section (3) of section 40A shall be made where any payment in a sum exceeding ten thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by 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 produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention. The idea was that since the cultivators, growers or producers of agricultural or forest produce, produce of animal husbandry, fish or fish products are mostly residents of rural areas not used to banking systems or not having bank accounts, the requirement of sub-section (3) of section 40A was impracticable and would lead to difficulties in its application. The idea could never have been to exempt all the producers of forest produce or other produce and products mentioned in sub-clauses (i) to (iii) from whomsoever they are purchased. We are, therefore, of the opinion that the Tribunal was in error in holding that the concluding words qualify only sub-clause (iv) and do not qualify all the sub-clauses occurring in clause (f). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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