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2022 (12) TMI 1453 - ITAT CHENNAIAddition u/s 40A(3) - payment has been made in cash in excess of Rs.20,000/- per day - making cash payment to suppliers, who are principal suppliers / traders and not agent of any farmer, grower etc.- AO noted that the rule refers to agricultural ‘produce’ and not to agricultural ‘product’ and therefore, the claim could not be accepted since the rice could not be termed as agricultural ‘produce’ - HELD THAT:- From the fact, it emerges that the assessee is a corporate entity and this is the first year of its operations. Therefore, the submissions that the suppliers insisted on cash payment before delivery of rice and the payment was made as per regular trade practice could not be disregarded. The assessee would have no option but to follow the existing rice trading practice to carry on its business. It could also be seen that agriculture produce is nowhere defined in the Act. In such a case, the assistance could be taken from the provision of Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987 which define agricultural produce to mean any produce of agriculture whether processed or unprocessed as specified in the schedule. The schedule specifies ‘Rice in all forms’ as agricultural produce under Cereals. The same would support the case of the assessee in terms of Rule 6DD(e)(i). The application of Rule 6DD(k) as applied by CIT(A) is duly supported by the decision of this Tribunal in Shri K. Babu [2019 (7) TMI 1995 - ITAT CHENNAI] from which an analogy could be drawn that the rice mill acted as agent for the assessee. Therefore, the same could not be faulted with.
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