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2012 (7) TMI 264 - AT - Income TaxDisallowance u/s 40A(3) - assessee contested that he is fully covered by the exceptions provided in rule 6DD of the I.T. Rules - assessee had purchased railway scrap material from South Western Railways - Held that:- Considering the exceptions are laid down in Rule 6DD(b)that payments exceeding twenty thousand rupees to be made to Government and, under the rules framed by it, such payment is required to be made in legal tender - As the meaning of legal tender has not been defined in the Income-tax Act, however, the dictionary meaning of ‘legal tender’ is “the coinage of a county in which the debts may be paid and which the creditor is bound to accept”. As the assessee made the payment in cash i.e in Indian currency because it is not the case of the department that the payment was made in foreign currency to the ‘South Western Railway’ towards purchase of scrap by the assessee, giving a confirmed view to the fact that the payment made in cash by the assessee was actually made in legal tender to the ‘South Western Railway’ which is a part of the Government was covered in the exceptions provided in clause (b) of Rule 6DD and the provisions of sec. 40A(3) as wrongly invoked - decided in favour of assessee.
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