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2016 (1) TMI 862 - ITAT CHENNAI

2016 (1) TMI 862 - ITAT CHENNAI - TMI - Disallowance u/s 40A(3) read with Rule 6DD - CIT(A) deleted the disallowance - Held that:- The assessee is in poultry business and purchasing birds at certain intervals with cash payments and has produced the ledger copy of M/s. Suguna Foods Ltd which is not disputed by Assessing Officer and relied on interpretation of clause (e) of Rule 6DD and explained that purchase of chicken birds falls within definition of livestock. Considering the above provisions .....

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y the assessee are reasonable and incidental to business and the ld.CIT(A) has rightly analyzed the nature of expenses and therefore, we are inclined to uphold the order of the ld.CIT(A) and dismiss the grounds of the Revenue.- Decided in favour of assessee. - I.T.A.No.2377/Mds/2014 - Dated:- 6-11-2015 - SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER For The Appellant : Shri P. Radhakrishnan, JCIT For The Respondent : Shri T.T. Durairaj Kandiar, CA ORDER PER .....

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CIT(A). 3. The brief facts of the case are that the assessee is an individual and is proprietrix of M/s V.J Chicken Trades, dealing in wholesale and retail trade of broiler chickens and filed return of income on 10.12.2011 disclosing total income as ₹ 6,32,240/-. The assessee is a dealer in broiler chickens and purchases are made from M/s Suguna Foods Ltd formerly known as Suguna Poultry Farm Ltd. The case was selected for scrutiny under CASS and notices u/s 143(2) and 142(1)of the Act we .....

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of supplier M/s Suguna Foods Ltd for the financial year 2009-10. The Assessing Officer, on perusal of ledger account found net purchases are ₹ 4.5 crores and assessee has made cash payments on innumerable occasions aggregating to ₹ 2,20,02,003/-. 4.2 The ld. AR submitted that Rule 6DD defines the exceptions of applicability of sec. 40A(3) of the Act depending upon the nature of business expediency and other relevant factors of poultry farming but ld. Assessing Officer made addition .....

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ked the nature of business of the assessee and circumstances under rule 6DD. The ld. A.R emphasized clause (e)(ii)of Rule 6DD applicability for the produce of animal husbandry (including livestock meat, hides and skins) or dairy or poultry farming and in the present case, assessee has made payment in cash for the purchase of chicken birds which are out of the purview of provisions of section 40A(3) of the Act. The ld. CIT(A) after perusing the submissions and considering the facts on record has .....

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e directed to be deleted . 4.3 Aggrieved by the order of the ld.CIT(A), the Revenue preferred an appeal before the Tribunal. The ld. DR argued that the provisions of sec. 40A(3) of the Act are applicable and the exceptions under Rule 6DD are not available to the assessee. The ld. CIT(A) failed to consider what are the exceptional circumstances in which the cash payments could be made and relied only on the evidence of supplier of poultry M/s Suguna Foods Ltd who are in the business of broiler fa .....

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vals with cash payments and has produced the ledger copy of M/s. Suguna Foods Ltd which is not disputed by Assessing Officer and relied on interpretation of clause (e) of Rule 6DD and explained that purchase of chicken birds falls within definition of livestock. On perusal of provisions of Rule 6DD which reads as: Clause (e) of Rule 6DD Cases and circumstances in which a payment or aggregate of payments exceeding twenty thousand rupees may be made to a person in a day, otherwise than by an accou .....

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), we are inclined to uphold the same by dismissing the ground raised by the Department. 5. Deletion of disallowance of diesel expense and driver batta. 5.1 In the assessment proceedings, ld. Assessing Officer has found the assessee has claimed G1,65,370/- as diesel expenses and G1,95,487/- as driver batta expenses and estimated disallowance @25% of total expenses which worked out to G90,215/-. The ld.CIT(A) in the appellate proceedings considering the clarifications and type of business in unor .....

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