TMI Blog2016 (4) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is not able to bring cogent evidence about applicability of these clauses of Rule 6D. But since, the assessee is able to establish business expediency by showing that the cash payment was made first and the supplies were received after a gap of five to ten days from all these nine parties and in view of applicability of Rule 6DD as claimed although could not be substantiated, we are of the considered opinion that disallowances u/s 40A(3) is not justified - Decided in favour of assessee Adhoc disallowance out of labour charges @ 10% - Held that:- Regarding the objection that there is only self made vouchers, we are of the considered opinion that this objection is not valid because for making payment to labourers, there canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri Pradeep Kapoor, CA For The Respondent : Shri Amit Nigam, DR ORDER PER A. K. GARODIA, A.M. This is an assessee s appeal directed against the order of Ld. CIT (A)-I, Lucknow dated 15.12.2013 for the AY 2010-11. 2. The ground no.1 raised by the assessee is as under: 1. Because, while upholding the validity of assessment order dated 10.01.2013, the CIT(A) has failed to consider and omitted to note that i) Jurisdiction in the case lied with ITO-3(1), Lucknow as is evident from the fact that first notice under section 143(2), had been issued by the said Income Tax Authority. II) subsequent notices under section 143(2) dated 09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Ld. CIT(A) on this aspect which has been reproduced by the Ld. CIT(A) on pages 13 to 15 of his order. It was pointed out that payment to M/s H.L. Brick field of ₹ 4.70 lakh is covered by Clause-f of Rules 6DD because the bricks were reproduced by the brick supplier without the aid of power. Regarding the payment to M/s Shakti Enterprises ₹ 3.30 lakh for purchase of cement, it was submitted that the supplier was new to the assessee and therefore, he insisted for the payment to be made in cash before the supply could be made and therefore this issue is covered in favour of the assessee by the judgment of the Hon ble Allahabad High Court rendered in the case of CIT Vs. Avtar Singh Sons reported in 188 ITR 669 (All.). Regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, it is seen that the cash payment was made first and the materials were received thereafter. Same is the case with the remaining eight parties i.e. M/s B.P. Enterprises ₹ 1.00 lakh, M/s Godray Steel Fabricators ₹ 2.45 lakh, M/s Gomti Furniture ₹ 6.00 lakh, M/s H.L. Brickfield ₹ 4.70 lakh, M/s Neema Steel works ₹ 2.60 lakh, M/s O.M. Shakti Enterprises ₹ 2.60 lakh, Rastogi Enterpries ₹ 3.00 lakh and M/s Shakti Enterprises ₹ 3.30 lakh total ₹ 28.00 lakh. In respect of all these parties, cash payment was made before the receipt of supply. Now, in the light of these facts, we examine the issue as per Section 40A(3) read with Rule 6DD. The proviso below sub Section 3A of Section 40A re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee were rejected by Ld. CIT(A) on this basis that the assessee could not produce the evidence regarding this claim that the supplier insisted for making cash payment. Regarding the supplier being producer of goods without the aid of power, this was objection of Ld. CIT(A) that such supplier is not producing the goods in a cottage industry and regarding the claim that some payments were made on Sunday, this was the objection of the Ld. CIT(A) that the assessee could not establish that the payment was required to be made on that date i.e. Sunday. Hence, it is seen that the assessee could not establish it s claim by bringing cogent evidence in support of his contentions but this is a fact that the payments in cash were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after a gap of five to ten days from all these nine parties and in view of applicability of Rule 6DD as claimed although could not be substantiated, we are of the considered opinion that disallowances u/s 40A(3) is not justified under these facts. We therefore, delete the same. 8. Now, we deal with the second issue i.e. regarding adhoc disallowance out of labour charges @ 10%. As per para 4 of the assessment order, this is the objection of the Assessing Officer that the assessee has debited ₹ 3,88,81,751/- under the head labour charges in his P L account and from the verification of the books of accounts, it is found that only self made vouchers were available and the assessee has not maintained any register or muster Roll and on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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