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2019 (7) TMI 1995 - ITAT CHENNAIDisallowance u/s 40A(3) towards payments made in cash exceeding ₹.20,000/- - purchase of raw skins from various suppliers - AO held that the assessee had not made any direct purchases from the butchers but had purchased from other established traders and therefore did not accept the assessee’s claim of exemption under Rule 6DD(f) and also rejected the claim of exemption under Rule 6DD which exempts payments made to agents on behalf of the buyers for the reason that the said parties from whom the assessee purchased were not agents, but were traders themselves - HELD THAT:- The remand report of AO was received by the CIT(A) on 02.08.2018, wherein, we find that the AO has reiterated what was available in the assessment order and nothing more than that after retention of the additional evidences, surprisingly, for nearly eight years and the reason for that may be best known to him. On perusal of the remand report, as reproduced in the appellate order, the only contention of AO is that the suppliers from whom the assessee had purchased hides and they are not butchers. Even though it was purchased from those suppliers, those suppliers would have purchased from the butchers only and there is no other go and nothing is prevented the supplier to function as an agent for supplying the hides to the assessee. Generally, the suppliers/ exporters of finished leather purchase the raw material from the butchers on cash basis and to safeguard them, the Legislature intended to make a provision under Rule 6DD(k) that “where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such person”. There is no hard and fast rule that the agent should not be a supplier. In view of the above facts, we delete the addition made u/s 40A(3) of the Act. Appeal filed by the assessee is allowed.
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