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2017 (10) TMI 597 - KERALA HIGH COURTAddition u/s 40A - Cash purchase - Whether the assessee’s transactions are exempted under Rule 6DD - Paddy Purchase - Held that:- Section 40A(3) is a deeming provision; Rule 6DD clearly exempts the agricultural produce -paddy-from the rigours of section 40A(3) of the IT Act. As to the genuineness of purchases, the paddy quantity, believed by the Revenue for determining the yield, speaks volumes. And on the pricing, the Revenue has no ground to suspect or disbelieve the assessee’ claim, for it has not ascertained the market rate prevailing then. So we affirm the Tribunal’s findings on the disallowance: there should be no disallowance. The Yield we must observe that the issue of yield is a pure question of fact. And the Tribunal, indeed, has meticulously analysed the issue, leaving no room for doubt. Yet, we discuss the issue in brief. KNT Agro Mills disclosed the rice yield at 66.69% during the relevant period; KKR Agro Mills disclosed the yield of 68% on the turnover of 42.95 crores. But the record does not disclose that this yield includes discoloured, sprouted and weevilled grains, immature, broken and discoloured grain, or only the marketable rice. So, we cannot rely on the yield statics of these two mills. Tribunal has concluded that there was a maximum tolerance limit fixed for the rice yielded. Discoloured, sprouted and weevilled grains, immature, broken and discoloured grain, de-husked grain, moisture content, and so forth are the factors that have gone into making the total yield of 68%. The Tribunal has also found that the Kerala State Civil Supplies Corporation has expected the hullers to supply 60% return in sortex grade rice. The assessee’s yield of 62.66% is more than what was fixed by the Government.On this count, too, we concur with the majority of the Tribunal.
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