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2016 (11) TMI 1034 - AT - Income TaxDisallowance made under section 40A(3) - cash payments (in excess of ₹ 20,000 on each occasion) - purchase of its stock-in-trade (country liquor) - Held that:- The payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorised retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its authorised wholesaler licensee (agent), both de facto and de jure, is one of "principal" and "agent". We hold that the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in rule 6DD(k) of the Rules. We find that the assessee had made payments only to the customer of State Bank of India and not to State Bank of India. Hence the assessee's case does not fall under the exception provided in rule 6DD(a) of the Rules. We hold from the aforesaid findings that the assessee's case falls under the exceptions provided in rule 6DD(b) and rule 6DD(k) of the Rules. We have no hesitation in deleting the disallowance made under section 40A(3) of the Act in all the years under appeal. - Decided in favour of assessee.
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