By K. B. BHUJLE
Advocate
14
Principal CIT vs. GeeSquare Exports;
411 ITR 661 (Bom)
Date of order: 13th March,
2018
A.Y.: 2009-10
Section
40A(3) r.w.r. 6DD of ITR 1962 – Business expenditure – Disallowance u/s. 40A(3)
– Payments in cash in excess of specified limit – Exceptions u/r. 6DD – Payment
to producer of meat – Condition stipulated u/r. 6DD satisfied – Further
condition provided in CBDT circular of certification by veterinary doctor
cannot be imposed – Payment allowable as deduction
The
assessee exported meat. It purchased raw meat paying cash. Payments made in
cash in excess of Rs. 20,000 were disallowed u/s. 40A(3) of the Income-tax Act,
1961 on the ground that in view of Circular No. 8 of 2006 issued by the CBDT
for failure to comply with the condition for grant of benefit u/r. 6DD of the
Income-tax Rules, 1962 requiring certification from a veterinary doctor that
the person issued the certificate was a producer of meat and slaughtering was
done under his supervision.
The
Tribunal allowed the assessee’s appeal. It held that section 40A(3) provided
that no disallowance thereunder should be made if the payment in cash was made
in the manner prescribed u/r. 6DD. The Tribunal held that the payment made to
the producer of meat in cash satisfied such requirement and that neither the
Act nor the Rules provided that the benefit would be available only if further
conditions set out by the CBDT were complied with. The Tribunal further held
that the scope of Rule 6DD could not be restricted or fettered by the circular.
On appeal
by the Revenue, the Bombay High Court upheld the decision of the Tribunal and
held as under:
“i) The assessee having satisfied the
requirements u/r. 6DD could not be subjected to the disallowance of the
deduction of expenditure on purchases in cash of meat u/s. 40A(3).
ii) The
CBDT circular could not put in new conditions not provided either in the Act or
in the Rules.”
