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2008 (3) TMI 350 - AT - Income TaxAddition u/s 40A - Held that:- As per Departmental Representative that the necessary facts are not available on record to examine the contention of the assessee that its case falls in clause (k), (l) or (b) of Rule 6DD. We agree with the ld. Departmental Representative. The claim of the assessee would require examination of the facts with reference to the books of account so as to ascertain on which particular date payment was made and whether such date was bank holiday or not so as to ascertain the applicability of Rule 6DD(k). With regard to applicability of Rule 6DD(l) and Rule 6DD(b) also further facts are required to be examined. The learned counsel for the assessee has given the copy of the supply order issued by Sub-Divisional. Controller, Food and Supplies, Jangipur giving direction to the assessee to make the payment in cash. However, it was pointed out by the ld. Departmental Representative that these supply orders are dated 2007 and, therefore, will not be applicable to the year under consideration. What was the exact direction of the supply order in the accounting year relevant to assessment year under consideration would require to be examined. In view of the above, we deem it proper to set aside the orders of the authorities below on this point and restore the matter back to the file of the Assessing Officer. Addition u/s 40A - Held that:- For the first time on 13-3-2006, the Assessing Officer asked the assessee to show cause why the payment exceeding ₹ 20,000 otherwise than by crossed or account payee cheque should not be disallowed under section 40A(3). The assessee furnished its explanation on 21-3-2006 claiming that its case falls within Rule 6DD(f)(ii). The Assessing Officer rejected the assessee's contention on the ground that the assessee could not prove that the parties, to whom the payment had been made, were either cultivators, growers or producers of raw hides and skins. However, it is evident that the Assessing Officer did not allow any opportunity whatsoever to the assessee to lead necessary evidence in support of its contention that the persons from whom hides and skins were purchased were the producers thereof. The CIT(A) has discussed the legal aspects of the issue at length, but the factual matrix of the case has not been examined even at his end. In view of the above, we set aside the orders of the authorities below on this point and restore the matter back to the file of the Assessing Officer and direct him to allow adequate opportunity to the assessee to produce necessary evidence in support of its contention. Deduction u/s 80HHC - Held that:- Profits of business for the purpose of section 80HHC means the profits of business as computed under the head "Profits and gains of business or profession". Section 29 of the Income-tax Act provides that profits and gains of business shall be computed in accordance with the provisions contained in sections 30 to 43D of the Income-tax Act. Thus, whatever is the profits and gains of the business as computed by the Assessing Officer under the head "Profits and gains of business or profession", should be taken as profits of the business for the purpose of computation of deduction under section 80HHC. We, therefore, direct the Assessing Officer to recompute the deduction under section 80HHC as per our observation above.
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