DCIT, CHENNAI vs. R.K.POWERGEN PVT. LTD., CHENNAI

Both the appeals of the Revenue are directed against the common order passed by the Commissioner of Income Tax (Appeals) -3, Chennai, dated 31.01.2017 and pertain to assessment years 2007-08 and 2012-13. Since common issue arises for consideration in both the appeals, we heard these appeals together and disposing of the same by this common order.

Ms. S. Vijayaprabha, the Ld. Departmental Representative, submitted that during the course of assessment proceeding, it was found that the assessee paid amount exceeding `20,000/- per day in cash, in violation of Section 40A(3) of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. D.R., the assessee claimed before the Assessing Officer that the cash payment was made to registered dealers for purchase of agricultural waste and bio-mass waste as raw materials for generation of power. Therefore, according to the Ld. D.R., the assessee claimed that the payment made by it exceeding `20,000/- in cash was excluded under Section 40A(3) of the Act in view of clause (f) of Rule 6DD of the Income-tax Rules, 1962.

Referring to the order of this Tribunal in the assessee's own case for assessment years 2008-09 to 2011-12, the Ld. Departmental Representative submitted that on identical circumstances, this Tribunal found that the payments were made to transporters, therefore, there cannot be any disallowance under Section 40A(3) of the Act. The Ld. D.R. further submitted that for the assessment years 2008-09 to 2011-12, this Tribunal found that the payments were made to lorry drivers. However, for the assessment years under consideration, the payments were made to the dealers. The books maintained by the assessee also disclosed the payment made to the dealers who supplied goods to the assessee. Therefore, according to the Ld. D.R., the order of this Tribunal for the assessment years 2008-09 to 2011-12 is not applicable to the facts of the case for the assessment years under consideration, hence, the CIT(Appeals) is not justified in allowing the claim of the assessee.

On the contrary, Shri V. Ravichandran, the Ld. representative for the assessee, submitted that the payments were, in fact, made to the transporters. According to the Ld. representative, the assessee purchased agricultural waste and bio- mass waste from agriculturists as raw materials for generation of power. On a query from the Bench, the Ld. representative submitted that the agricultural waste and bio-mass waste is nothing but Karuvelamudai. The assessee has to purchase Karuvelamudai from the registered dealers and occasionally from the agriculturists directly. Referring to Rule 6DD of the Income-tax Rules, 1962, the Ld. representative submitted that the payments made to agriculturists for purchase of agricultural produce are exempted under the provisions of Section 40A(3) of the Act. Moreover, the payments were made only to the transporters for delivery of goods. For the assessment years 2008-09 to 2011-12, on identical circumstances, according to the Ld. representative, this Tribunal found that since the payments were made to lorry drivers, the provisions of Section 40A(3) of the Act is not applicable.

On a query from the Bench, for assessment years under consideration, the contention of the Revenue and finding of the Assessing Officer are that the payments were made to registered dealers, however, for the assessment years 2008-09 to 2011-12, the fact was that the payments were made to lorry drivers, therefore, how the decision of this Tribunal for the assessment years 2008-09 to 2011-12 is applicable for the assessment years under consideration? The Ld. representative for the assessee submitted that in such a case, the matter may be remitted back to the file of the Assessing Officer for verification to find out to whom the payments were actually made. The Ld. representative reiterated that the payments were made only to the lorry drivers. However, he may not have any objection to verify the factual situation by the Assessing Officer.

We have considered the rival submissions on either side and perused the relevant material available on record. The assessee claims that the payments were made to lorry drivers, therefore, the provisions of Section 40A(3) of the Act is not applicable. According to the Ld. representative for the assessee, on identical circumstances, this Tribunal found that the provisions of Section 40A(3) of the Act is not applicable for assessment years 2008-09 to 2011-12. The Ld. representative has very fairly submitted that he has no objection in remanding back the matter to the file of the Assessing Officer to verify whether the payments were made to lorry driver or to the dealers who supplied goods to the assessee.

Karuvelamudai tree is not cultivated by any agriculturist. It is a kind of tree which grows itself spontaneously in vacant land.

In the result, both the appeals filed by the Revenue are allowed for statistical purposes.