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2016 (9) TMI 1000 - AT - Income TaxDisallowance u/s 40A(3) - Held that:- In the present case, the following facts are not disputed. 1) The APPELLANT is a resident of CHAKDOLA village and he carries out his business of distribution of Kerosene Oil, from the said village, distributing the same to various M R shops in the region. 2) The said CHAKDOLA vii/age is located in a remote corner s of the District of Burdwan, nearest town being Jamuria s situated about 5 KM away , and the nearest 'bank located at Jamuria Town. 3) In the financial year 2005-06, there was no banking facility at Chakdola Village . Now in the year 2013, also there are no Banks at Chakdola Village. 4) Payments in CASH are made by the appellant for purchase of goods at Govt. fixed rates, at Chakdola village. 5) Kerosene Oil are transported in OIL TANKERS, to Chakdola Village, and stored in OIL DRUMS for further distribution, down the line, and tank are also paid by the appellant. 6) Even though the appellant has a bank Nc at Jamuria town , it is mostly inoperative, because it is practically not possible to pay by A/c payee cheques, because a single cheque will take 15 days time for clearance, and the entire chain of distribution will break down. Assessee would fall within clause (h) of Rule 6DD of the Rules and therefore no disallowance ought to have been made u/s.40A(3) of the Act. Though the Assessee made the above submissions before the CIT(A), the CIT(A) has not given any findings on the applicability of Rule 6DD(h) of the Rules. For the reasons given above, we hold that no disallowance u/s.40A(3) of the Act ought to have been made in the case of the Assessee as the case of the Assessee is covered by exceptions set out in Rule 6DD(h) of the Rules. The disallowance is directed to be deleted. - Decided in favour of assessee.
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