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2022 (5) TMI 829 - AT - Income TaxDisallowances u/s.40A(3) - payment of expenses was made in cash exceeding the stipulated amount - HELD THAT:- Disallowance on the basis of the genuineness of the transactions while others sustaining the disallowance - what matters for the Tribunal is to follow the binding precedent, being, the judgment of Hon’ble jurisdictional High Court. That being the position, the Pune Tribunal is bound by the judgment of the Hon’ble jurisdictional High Court in Madhav Govind Dulshete [2018 (10) TMI 869 - BOMBAY HIGH COURT] sustaining the disallowance in case of cash payments exceeding the stipulated limit notwithstanding the fact that the transactions were genuine and the parties were identifiable. Respectfully following the judgment, we uphold the disallowance sustained in the first appeal. This ground fails. Addition u/s 40A(3) - assessee contended that the payment was covered under Rule 6DD(k) being payment made to an agent. The AO rejected this contention, which got affirmed in the first appeal - HELD THAT:- Instant case, it is seen that the assessee made payment to contractors and such payments were as such recorded as expenditure in the books of account of the assessee. In such circumstances, it cannot be said that the contractors were agents of the assessee for the provision of labour. Had the payments been made by the assessee to contractor and then, in turn, to the labourers and the transaction of payments to labourers had been considered as expenditure of the assessee, then the case would have been covered by clause (k) of Rule 6DD. Here is a case in which the assessee paid to the contractors on principal-to-principal basis and no agency of any sort was involved in this transaction. We, therefore, hold that the authorities below were justified in coming to the conclusion that clause (k) of Rule 6DD was not attracted. If Rule 6DD is taken out of purview, then the payment is otherwise in violation of section 40A(3) of the Act. As such payments were made in violation of the provision, we hold that the disallowance u/s.40A(3) has been rightly confirmed in the first appeal.
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