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2007 (11) TMI 599 - HC - Income TaxPayments made in cash in excess - within the exception clause, rule 6DD(a) of the Income-tax Rules, 1962 or Not - Disallowance of addition u/s 40A(3) - CIT confirming the assessment revised u/s 154 - HELD THAT:- The contention of the petitioner is that payments were made to the account of the suppliers maintained with State Bank of Mysore and Hassan District Co-op. Central Bank Ltd. Counsel for the petitioner contended that all these banks come under clause (ii) of sub-rule (a) of rule 6DD and, therefore these two payments are eligible for exemption from disallowance under section 40A(3) of the Act. I am in agreement with the contention of counsel for the respondents because the protection under clause (a) of rule 6DD is available only if the payments are made to any of the institutions referred to thereunder. Obviously in order to qualify for the benefit of rule 6DD(a) the beneficiary of the payee should be an institution referred to therein. Even though counsel for the petitioner contended that payments to any beneficiary in the account maintained in the banks referred to in rule 6DD(a) is also covered by the exception, I do not think the same can be accepted because, some of the institutions referred to in the rule, namely, Reserve Bank of India, State Financial Corporations, Industrial Development Corporation and other financial institutions are not engaged in banking operations. Therefore, rule 6DD(a) applies only for payments to institutions referred to therein and not for payment made to any party’s account maintained in the institutions referred to therein. In the circumstances, I reject the contention of the petitioner and uphold Ext. P6 order of the CIT confirming the assessment revised u/s 154 of the Act. O.P. is dismissed as devoid of any merit.
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