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TMI Blog2022 (11) TMI 1508X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 6DD(f)(ii) of the Rules. If that be the position, no fault can be found with the view taken by the Tribunal in affirming the disallowance made by the assessing officer as confirmed by CIT(A). We find from the assessment order that assessing officer had considered each individual payment made by the appellant exceeding Rs. 20,000.00 and not the sum total of the payment. Incurring of expenditure by the assessee was above Rs. 20,000.00 and splitting the payment into smaller amounts would not take the case out of the mischief of Section 40A(3) of the Act. Decided in favour of revenue. - Hon ble The Chief Justice Ujjal Bhuyan And Hon ble Sri Justice C.V. Bhaskar Reddy For the Appellant : Mr. Karthik Ramana Puttamreddy For the Respondents : Mr. J.V. Prasad (Standing Counsel for Income Tax Department) JUDGMENT: HON BLE THE CHIEF JUSTICE UJJAL BHUYAN Heard Mr. Karthik Ramana Puttamreddy, learned counsel for the appellant and Mr. J.V.Prasad, learned Standing Counsel for Income Tax Department appearing for the respondents. 2. This appeal has been filed under Section 260-A of the Income Tax Act, 1961 (briefly, the Act hereinafter) by the assessee assailing the legality and validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that Rule 6DD(f)(ii) of the Rules would be applicable only if the seller carries on dairy farming and not otherwise. Tribunal held that the two companies from which appellant had purchased cream were not carrying on the business of dairy farming. Therefore, this ground of appeal was rejected by the Tribunal. On the second ground, Tribunal held firstly that incurring of expenditure by the assessee was above Rs. 20,000.00 and splitting the payment in smaller amounts would not take the case out of the mischief of Section 40A(3) of the Act. That apart, Tribunal held that appellant had factually failed to show that the certificate given by the auditors is wrong. Therefore, this contention of the appellant was also rejected. 9. Hence, this appeal. 10. Learned counsel for the appellant furnished a compilation comprising relevant portion of the statute and citations and submits therefrom that a careful analysis of Rule 6DD(f)(ii) of the Rules would go to show that cash payments made by the appellant to the two companies for procurement of cream would be entitled to the benefit thereunder. He particularly emphasised on the language of clause (f)(ii) of Rule 6DD of the Rules and submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cream from two companies which in turn had purchased milk from the actual producers of milk. The two companies were not engaged in dairy farming. Appellant s cash payments to the two companies therefore cannot be said to be payments made to dairy farmers. In that view of the matter, appellant is not entitled to the benefit of Rule 6DD(f)(ii) of the Rules. Insofar contention of learned counsel for the appellant that the Tribunal had erred in considering the totality of the transactions instead of each individual transaction, he submits from the assessment order that assessing officer very clearly mentioned that cash payments exceeding Rs. 20,000.00 for each time would attract provisions under Section 40A(3) of the Act. Therefore, this question does not arise at all in the facts of this case. 13. Submissions made by learned counsel for the parties have received the due consideration of the Court. 14. To appreciate the rival contentions it would be apposite to advert to the statutory provisions at the outset. We may mention that Section 40A(3) of the Act has undergone several amendments. The said Section as it stood at the relevant point of time is as under: Where the assessee incurs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereunder namely:- (a) where the payment is made to (i) the Reserve Bank of India or any banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); (ii) the State Bank of India or any subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); (iii) any co-operative bank or land mortgage bank; (iv) any primary agricultural credit society as defined in clause (cii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934), or any primary credit society as defined in clause (civ) of that section; (v) the Life Insurance Corporation of India established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956); (vi) the Industrial Finance Corporation of India established under section 3 of the Industrial Finance Corporation Act, 1948 (15 of 1948); (vii) the Industrial Credit and Investment Corporation of India Ltd; (viii) the Industrial Development Bank of India established under section 3 of the Industrial Development Bank of India Act, 1964 (18 of 1964); (ix) the Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963 (52 of 1963); (x) the Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town; (i) where any payment by way of gratuity, retrenchment compensation or similar terminal benefit, is made to an employee of the assessee or the heirs of any such employee on or in connection with the retrenchment, resignation, discharge or death of such employee, if the income chargeable under the head Salaries of the employee in respect of the financial year in which such retirement, resignation, discharge or death took place or the immediately preceding financial year did not exceed Rs. 7,500; (j) where the payment is made by an assessee by way of salary to his employee after deducting the income tax from salary in accordance with the provision of section 192 of the Income Tax Act, 1961, and when such employee (A) is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and (B) does not maintain any account in any bank at such place of ship; (k) where the payment was required to be made on a day on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intermediaries from the actual farmers, namely, milk which is processed into cream which in turn is purchased by the appellant for the purpose of converting cream into butter and ghee and thereafter selling in the market. The two companies cannot be said to be a cultivator or grower or producer of milk or cream which are undoubtedly dairy products. In the circumstances, any payment made to the two companies would not be a payment made to a cultivator or grower or producer of a dairy product so as to bring the cash transaction within the mischief of Rule 6DD(f)(ii) of the Rules. If that be the position, no fault can be found with the view taken by the Tribunal in affirming the disallowance made by the assessing officer as confirmed by CIT(A). 20. In view of our above finding, it may not be necessary for us to answer the second question so framed. Nonetheless, we find from the assessment order that assessing officer had considered each individual payment made by the appellant exceeding Rs. 20,000.00 and not the sum total of the payment. Relevant portion of the assessment order reads as under: 13. While examining the firm s books of account for the F.Y 2000-01, it is found that the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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