Section 40A(3) : Cash payment to Labour contractor on principal-to-principal basis not allowable

Shree Buildcon & Associates Vs JCIT (ITAT Pune) It is found as an admitted position that the assessee paid the amounts in question to the labour contractors in violation of section 40A(3) of the Act. The case of the assessee is that the payments were covered under clause (k) of Rule 6DD, which provides that no disallowance will be made where the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such persons. The important point to be noted in such cases is that the payment must be by the assessee to his agent, who, in turn...