Law: Income Tax Act, 1961

Section: 40,40A(3),6DD

Income-tax--Business expenditure---Disallowance---Payment exceeding prescribed limit other-than by crossed cheque or crossed Bank draft---Exclusion from disallowance---Clear finding needed as to clause of R. 6DD under which such exclusion operates---Matter remanded---Indian Income Tax Act, 1961, S.40A(3)---Indian Income Tax Rules, 1962, R.6DD. The assessee made local purchases of cashew kernels. These purchases included a purchase of cashew kernels worth Rs.50,000 from R. The Assessing Officer discovered that the payment was made through bearer cheque. In order to test the genuineness of the payment, the Assessing Officer issued summons to R, who was never produced for examination before him or before any other authority by the assessee. The Assessing Officer disallowed the deduction and this was confirmed by the Commissioner of Income-tax (Appeals). The Tribunal, however held that the payment was covered by rule 6DD of the Income-tax Rules, 1962, and could not be disallowed .On a reference: Held, that the Tribunal simply observed that the payment made by the bearer cheque to R was covered by rule 6DD. Rule 6DD contains clauses (a) to (j). It was, therefore, the duty of the Tribunal to record a clear finding as to the clause of rule 6DD under which the payment in question fell. If the Tribunal was of the view that cashewnut kernels were covered by rule 6DD(f), then unless a clear finding was recorded that payment by the bearer cheque made to R was in fact made to growers or producers of cashewnuts, the advantage of rule 6DD(f) could not be taken. If the Tribunal was of the view that the payment was covered by rule 6DD(j), then unless a clear finding was recorded regarding the circumstances as stated in clause (j), that clause could not be pressed into service. The question whether the payment to R was deductible could not be answered. [Matter remanded]. JUDGMENT OM PRAKASH, C.J.---As per direction given under section 256(2) of the Income Tax Act, 1961, the Income-tax Appellate Tribunal referred the following question relating to the assessment year 1978-79 for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492