Cash payments
Querist : Anonymous
Many a Time This Issue Has Been Discussed Here Only.
But A Conclusion Which I Reached is:-
Its wont Attract Section 40 A 3.
some other views are also there, that it will attract.
Querist : Anonymous
Querist : Anonymous
You Pls Rfere The Case:-
Bangalore Tribunal in Sri Renukeswara Rice Mills Vs Income-Tax Officer (reported in 93 ITD 263 - 278 ITR 77)
Where It Was Held That It is Allowable.
But in case of:-
K Abdu & Co. ..
In That It Was Held That Its Disallowed.
In this case, the assessee, for the purpose of purchase of rice, paid the amount directly to the bank account of the payee. The Tribunal held as follows: "The effect of issue of crossed cheque/DD is that the payee named therein receives the payment through banking channels. The purpose is dual. In the first instance it is to see that the payee and payee alone, receives the payment and to ensure that the payment is routed through bank channel so as to trace the origin and conclusion of the transaction. In the case before us, it is seen that instead of issuing cheque/DD the assessee prepared a challan and along with the cash the challan was presented to the bank of the payee for the credit of the same in the account of payee. In the result it is ensured that the payee and payee alone, receives the payment and the origin and conclusion of transaction is traceable. Thus payment of sum directly in the bank account of payee fulfils the criteria for ensuring the object of introduction of Section 40A(3). This is not a direct payment to the payee but only to the credit of this bank account without the payee actually receiving the cash. We accordingly hold that such payment is not in violation of provision of Section 40A(3) and hence no disallowance is called for."
I find that apart from the above, the fact that the payment was made for purchasing agricultural commodity also contributed to the decision in favour of the assessee. The Tribunal observed "Clause (f) of Rule 6DD provides that where the payment is made for the purchase of agricultural produce to the cultivator, Section 40A(3) will not apply. Similarly, Clause (1) of Rule 6 DD provides that where the payment is made by any person to his agent who is required to make payment in cash for goods, Section 40A(3) will not apply. Since the assessee has paid the sum to his agent who is the payee in the present case, and who in his turn is required to make payment to the cultivator, indirectly, the assessee has paid for the purchase of agricultural produce to the cultivator through the agent. Thus, a combined reading of Clauses (f) and (1) of Rule 6DD will take away the transaction from the clutches of Section 40A(3)."
It Should Be Allowed.
I Will Prefer Renukeswara Rice Mill Case.
Bringing This Section Motive Behind Was:-
to Route up Amount Through Banking Channel...
and is There...
Querist : Anonymous
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