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TMI Blog2021 (9) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of Attar Singh Gurmukh Singh vs. Income Tax Officer Ludhiana Etc. [ 1991 (8) TMI 5 - SUPREME COURT] has held that the Rule 6DD which provides for exceptions u/s 40A(3) of the Act against applicability of sec. 40A(3) of the Act, is not exhaustive enough to visualize all kinds of business expediency in all possible situations and it is for the appropriate authority to decide regarding genuine business expediency. As further held that rule must be interpreted in a manner so as to advance and not to frustrate the object of the legislature. That primary object of enacting Section 40A(3) of the Act was two folds. Firstly, putting a check on treating transactions with a mind to evade the liability to tax on income earned ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule, 1962. 3. The brief facts relevant to the issue are that the assessee had a factory at 36, B.T. Road, Kolkata-56. There was a prolonged labour strike from 19.08.2010 in the factory and discussions at tripartite level was done between the labour union, the management and Deputy / Asst. Labour Commissioner, Barackpore, Govt. of West Bengal. The settlement was done on 25.06.2011 and a voluntary separation scheme was finalized. As per the said settlement the key issue was in view of huge financial loss of the assessee s factory due to unviable products, changed railway procurement policy, labour dispute, steep rise in input price, red category pollution status of factory. The management proposes to relocate the factory to rubber park at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see claimed ₹5,92,661/- being 1/5th of the VSS expenditure actually incurred of ₹29,63,309/- u/s 35DDA(1) of the Act. However, Ld. Assessing Officer (in short AO ) during the assessment proceedings disallowed the entire VSS of ₹29,63,309/-. 4. Aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the Ld.CIT(A), but remained unsuccessful. 5. Before this Tribunal, the Ld. counsel for the assessee has submitted that the payment in cash was made to the employees / labourer out of compulsion as the factory of the assessee has been stopped due to labour strike. The cash payment of more than ₹50,000/- was made to the labourers so that the business of the assessee may be resumed. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated 03.04.2019 has extensively discussed about the scope of the disallowance which can be made u/s 40A(3) of the Act, and after relying upon various case laws including the decision of the co-ordinate Jaipur bench in the case of A. Daga Royal Arts vs. Income Tax Officer, Ward-2(2), Jaipur ITA No.1065/JP/2016 vide order dated 15.05.2018 in which further reliance has been placed on the decision of the Hon'ble Supreme Court in the case of Attar Singh Gurmukh Singh vs. Income Tax Officer Ludhiana Etc. (1991) AIR 2109, has held that the Rule 6DD which provides for exceptions u/s 40A(3) of the Act against applicability of sec. 40A(3) of the Act, is not exhaustive enough to visualize all kinds of business expediency in all possible sit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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