Decision on cash purchase directly from growers and applicability of rule 8D

Last updated: 21 May 2013

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The issue of cash purchases was also examined in the preceding years. While during the course of the assessment proceedings for the assessee had categorically submitted that the raw materials i.e carcass had been purchased through agents, as also the assessee took the plea that the purchases of raw materials i.e carcass was made directly from the growers/ farmers/ villagers. In the case of the assessee for Assessment Year 2003-04, 2004-05, 2005-06, 2006- 07 & 2007-08 the Assessing Officer invoked the provisions of section 40A(3) and disallowed 20% of the cash purchases by holding that the cash purchases had been made through agents known to the assessee in big towns with adequate banking facilities. Therefore, the Assessing Officer held that the case of the assessee did not fall under the exclusionary conditions of Rule 6DD (f). The issue of cash purchases was also examined during the assessment proceedings for Assessment Year 2004-05, 2005-06, 2006-07 & 2007-08. For Assessment year 2004-05, 2005-06, 2006-07 & 2007-08, as already stated above, the assessee took the plea that the purchases had been made directly form the growers/ farmers. Villagers and so it was argued, by the assessee, that its case was covered by Rule 6DD(f) and that the provisions of section 40A(3) were not applicable in its case.

Citation :
ACIT, Circle-12(1), New Delhi. (APPELLANT) Vs M/s Hind Industries Ltd., A-1, Phase-I, Okhla Industrial Area, New Delhi. PAN-AAAH0870N (RESPONDENT)