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2016 (10) TMI 845 - ITAT KOLKATA

2016 (10) TMI 845 - ITAT KOLKATA - TMI - Addition u/s 40A(3) - making expenditure in cash - 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 (authorized retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its Authorised Wholesaler Licensee (Agent), both defacto and dejure, is one of 'Principal' and 'Agent'. We hold that the asse .....

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.M. This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals), Asansol dated 17.12.2013 and the solitary issue involved therein relates to the disallowance of ₹ 56,76,743/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) under section 40A(3) of the Act. 2. The assessee in the present case is a partnership firm, which is engaged in the business of trading in Country Spirit and Pachwai. The return of income for the year un .....

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cking Co. Pvt. Limited in the sums exceeding ₹ 20,000/-. According to the Assessing Officer, the said payments were made by the assessee in contravention of section 40A(3) of the Income Tax Act, 1961 and since the assessee could not explain any exceptional circumstances as specified under Rule 6DD of Income Tax Rules, 1962 for making such payments, he made a disallowance of ₹ 56,76,743/- under section 40A(3) of the Act. 3. The disallowance made by the Assessing Officer under section .....

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ders vs ITO Ward-2 Cooch Behar in ITA No.1542/KoI/2012 it can be seen that it is not a decision on law. It narrates a compulsive situation. A part of very same order is being relied upon by me. In paragraph 5 it is stated that "when the Government makes is compulsory to pay in cash". Whether a compulsion exists or not is matter of fact and compulsion is a pre-requisite to be proved. The appellant is duty bound to explain the compulsion. In other words on facts and circumstances of case .....

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ules, 2005 does not make compulsion to pay by cash to the company from where spirit is purchased) and here payment is made to a company having distinct identity and PAN and not Government. 7. The Authorized Representative also submitted that the decision of the Hon ble ITAT, Special bench, Kolkata has in ITO, Ward-1, Murshidabad -vs.- M/s. Kenaram Saha and Subhash Saha in ITA No. 1545/KOL/2007 for AY 2004-05 was in favour of appellant. This is incorrect. The relevant paragraph reads "80. In .....

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on of Hon. Income Tax Appellate Tribunal is to grant exemption under rule 6DD(b) is not correct. Hence the reliance of appellant on the decision of Hon ble Income Tax Appellate Tribunal referred to here helps his cause in no manner. 8. Upon going through the submission, I find that no case is made out to prove that any of sub-rules of rule 6DD applies. For applying rule 6DD(b) mandate that cash payment is compulsory is to be proved. For applying rule 6DD(k), not only the mandate that cash paymen .....

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cord. It is observed that the issue involved in this appeal of the assessee relating to the disallowance under section 40A(3) is squarely covered in favour of the assessee by the various decisions of this Tribunal. In one of such cases, namely M/s. Amrai Pachwai & C.S. Shop decided by the Tribunal vide its order dated 15.01.2014 passed in ITA No. 1251/KOL/2011, payments were made by the assessee against purchases made from the same party, namely M/s. Asansol Bottling & Packing Co. Pvt. L .....

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909. At this juncture, it would be relevant to go into the definition of warehouse as provided under the State Excise Rules, 2005, as below:- Warehouse , under Rule 2(vii) of the W.B. Excise Rules, 2005, means the warehouse for supply of country spirit to retail vendors, established at convenient places by the Commissioner at the expense of the State Government, or at the expense of a person to whom the exclusive privilege of supplying or selling country spirit by wholesale has been granted unde .....

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nsee to whom the exclusive privilege is granted u/s 22 of the Bengal Excise Act, 1909. Hence there could be no doubt that the warehouse is established by the State Excise Commissioner. Hence it could be safely concluded that the warehouse so established by the State Excise Commissioner is a State Government establishment. It would also be pertinent to note that the said warehouse has been specifically established for supply of country spirit to retail vendors (assessee herein) only and not to an .....

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r intoxicating drugs - (1) The State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege - (a) of manufacturing, or supplying by wholesale, or (b) of manufacturing, and supplying by wholesale, or (c) of selling, by wholesale or retail. or (d) of manufacturing or supplying by wholesale and selling retail, or (e) of manufacturing and supplying by wholesale and selling retail, any country liquor or intoxicating drug within any spec .....

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& Packaging Co. Pvt Ltd (Bottling Plant) is a warehouse within the meaning of Rule 2(vii) of the Excise Rules 2005 and said warehouse is a State Government establishment, established and controlled by the Excise Commissioner. It would be relevant to reproduce Rule 6DD(b) of the IT Rules at this juncture;- (b) where the payment is made to the Government and, under the rules framed by it, such payment is required to be made in legal tender. In the instant case, the assessee (retail vendor) had .....

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