Case Law Details
CIT Vs Ayshwarya Sea Food Pvt. Ltd. (Madras High Court)
on facts, the Commissioner of Income Tax (Appeals) and the Tribunal held that the assessee had purchased shrimp products from a supplier at Nellore and the explanation given by them at the first instance before the Assessing Officer is that they are doing shrimp feed trading business and they have purchased shrimp feed from a company at Chennai and the invoice is directly raised locally at Chennai and they have sold the shrimp feed at Nellore and Ongole Districts of Andhra Pradesh and they have sold the feed to the shrimps farmers and deposited the cash directly to M/s.C.P.Aquaculture (India) Pvt. Ltd.’s Bank account. the dealers/farmers use to deposit the amount into the Bank account of M/s. C.P.Aquaculture (India) Pvt. Ltd. and fax the deposit slip to the said company as proof of deposit and based on the deposit slip, the said company will dispatch the shrimp feed and it also offers cash discount if payment is made in advance. Due to such compelling reasons, they had to deposit cash directly into the Bank account of M/s. C.P.Aquaculture (India) Pvt. Ltd. Further, they stated that there is a risk of carrying cash to various places and by issuance of cheque, there will be a time delay and the assessee will be prejudiced. The explanation offered was not found to be false but not accepted by the Assessing Officer on the ground that the said company M/s.C.P.Aquaculture (India) Pvt. Ltd. had a huge turnover and they have been importing shrimp food from abroad and there was no necessity for the assessee to make payments in cash to the said company. The question would be as to whether such a presumption or adverse inference could be drawn.
Be that as it may, the Commissioner of Income Tax (Appeals) considered the legal issue and found that, what was purchased was undoubtedly a fish or fish product, which will fall within the scope of Rule 6DD(f)(iii) and if it is so, no disallowance under Clause (a) of Sub-Section (3) of Section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under Clause (b) of Sub-Section (3) of Section 40A. This aspect has been factually brought out by the Commissioner of Income Tax (Appeals) as well as the Tribunal.
FULL TEXT OF THE MADRAS HIGH COURT ORDER /JUDGEMENT
This appeal by the Revenue, filed under Section 260-A of the Income Tax Act, 1961 (“the Act”), is directed against the order passed by the Income Tax Appellate Tribunal, Chennai, “A” Bench, in I.T.A.No.47/Mds/2009, for the Assessment Year 2002-03.
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