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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
per clause (f), any payment made for the products for purchase of the products manufactured or processed without aid of power in a cottage industry, such payments to the producer of such products would be excluded from the disallowance u/s 40A(3) of the Act. The claim of the assessee is, therefore, rest on the assertion that the case of assessee fall under clause (f) of Rule 6DD of Rules and explanation to Section 40A(3) of the Act. Learned counsel for the assessee primarily rested his arguments on the transactions being out of business expediency, hence they are out of rigorous of Section 40A(3). So far as the argument that the transactions fall under clause (f) hence would be out of preview of Section 40A(3) of the Act is concerned, no evidence is brought on record for supporting such contention. It is incumbent upon the assessee to prove that purchases were made from such person mentioned under Rule 6DD(f). In the absence of any supporting evidence, no relief could be granted. I, therefore, reject
this plea of learned counsel. The Learned counsel for the assessee has placed reliance on the judgment of Hon’ble Supreme Court rendered in the case of Attar Singh Gurumukh Singh Vs. ITO Ludhiana 1991 AIR 2109 (SC), wherein it has been held that the term of Section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. Therefore, looking to the facts where the assessee has made clear averments regarding business expediency and the Revenue has not rebutted the same. I, therefore, respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Attar Singh Gurumukh Singh Vs. ITO (supra), direct the Assessing Officer to delete the impugned disallowance.
In the result, appeal of the assessee stands allowed.
Order pronounced in open court on 2nd January, 2023.