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TMI Blog1986 (8) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... decided, one on September 17, 1981, and the other on January 20, 1984. The two income-tax cases were directed to be listed together because of the admission order in the second case. This judgment relates to the assessment year 1976-77 (ITC No. 176 of 1982). The question sought to be referred is as follows: " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that there was no justification for disallowing the payment in cash amounting to Rs. 11,85,653 disallowed by the Income-tax Officer under section 40A(3) of the Income-tax Act, 1961 ? " It was urged by learned counsel for the Department that there was clear question of law arising out of the Tribunal's order. But, equally, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever possible, the assessee had made payments by cheques, otherwise the payments were in cash. The Commissioner of Income-tax (Appeals) accepted the contention of the assessee on the ground that the cash payments satisfied the requirement of rule 6DD(j) of the Income-tax Rules, 1962. That rule can be reproduced here: "(j) in any other case, where the assessee satisfies the Income-tax Officer that the payment could not be made by a crossed cheque drawn on a bank or by a crossed bank draft (1) due to exceptional or unavoidable circumstances, or (2) because the payment in the manner aforesaid was not practicable, or would have caused genuine difficulty to the payee, having regard to the nature of the transaction and the necessity for exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " In view of rule 6DD(j), as reproduced above, the Circular of the Board and the circumstances under which payments were made in cash, we hold that there was no justification for disallowing the payment made in cash and the Commissioner of Income-tax was justified in deleting the disallowance. Here we may refer usefully to the case of petrol pumps. It is well known that the owners of the petrol pumps or those who run the management of these petrol pumps have to pay the cost of the tanker full of petrol in cash because the company insists on cash payment as and when the tanker fall of petrol reaches the petrol pump. The petrol is not transferred to the tank of the petrol pump unless the payment is made in cash. Nowhere such payments in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, considerations of business expediency and other relevant factors being borne in mind while interpreting the rules. It is noteworthy that the High Court held that rule 6DD(j) must be judged from the businessman's point of view and not of the Revenue. If, on the other hand, there are no exceptional and unavoidable circumstances necessitating the payment in cash, then the section has to be applied with full force as held by the Madhya Pradesh High Court in Porwal Udhyog (India) v. CIT [1982] 135 ITR 591. Similarly, in a case decided by the Punjab and Haryana High Court, CIT v. Sawaran Singh Balbir Singh [1982] 136 ITR 595, where payments had to be made in cash due to the nature of the contract, it was held that the disallowance could not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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