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2014 (12) TMI 251 - AT - Income TaxDisallowance on payments made in places where no banking facility is available u/s 40A(3) - Claim of exemption in respect of cash payments – Held that:- Following the decision in The Deputy CIT Circle-1(1) Hyderabad Versus M/s. Abhinandana Housing Pvt. Ltd. [2014 (2) TMI 1021 - ITAT HYDERABAD] - cash payments made are covered by exceptions provided under different clauses of Rule 6DD, hence, no disallowance can be made u/s 40A(3) – in Sahitya Housing Pvt. Ltd. vs. DCIT [2014 (2) TMI 811 - ITAT HYDERABAD] it has been held that Sec 40A(3) itself provides that the exceptions will have to be prescribed having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors - considering the nature of activity of the Assessee and the necessity for them to pay cash to the land owners, it was held that the condition under Rule 6DD for exemption viz., transactions should have taken place on Bank Holidays should be read down in the case of the Assessee - no banking facility is available where the properties were purchased by Assessee, therefore, there was no choice for the assessee except to make the payments in cash due to exceptional or unavoidable circumstances as provided under Rule 6DD - since there is no evidence brought on record by the AO to suggest the availability of banking facility in the place where the properties were purchased by the assessee, therefore, in view of Rule 6DD(g) the disallowance cannot be made u/s. 40A(3) - the CIT(A) is justified in deleting the addition – Decided against revenue. Cash payments made on holidays - payments were made in installments - requirement to make payments on holiday to claim exception under Rule 6DD(j) or not – Held that:- The CIT(A) rightly directed the AO to verify whether cash payments disallowed by the AO were made on public holiday and if it is so to allow the expenditure as per rule 6DD(j) of the IT Rules – Decided against revenue. Addition on payments made to agents sustained – Held that:- Revenue contended that the agents worked for other persons as agents and they cannot be agents to the assessee - There is no prohibition or restriction on a middleman to work as agent of different parties, if he was acting on behalf of the assessee as agent - The assessee's case falls under the purview of clause 6DD(k) of IT Rules, 1962 - Being so, exemption is to be given and addition cannot be made u/s. 40A(3) of the Act. The reasons advanced by the Department are not appropriate. Accordingly, we are inclined to allow the claim of the assessee at ₹ 3,15,65,263 – revenue has failed to bring any material on record to show that facts in the assessment year are in any way different from facts considered by the coordinate bench, respectfully following the aforesaid decision of the coordinate bench, the order of the CIT(A) is upheld – Decided against revenue.
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