Case Law Details
ITO Vs Shivaji Hi-Tek Foods Pvt. Ltd (ITAT Chennai)
ITAT Chennai held that rice being specified in schedule is covered within the definition of agricultural produce as per provision of Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987. Accordingly, as per Rule 6DD(e)(i) of the Income Tax Rules the same is exempt from disallowance under section 40A(3) of the Income Tax Act.
Facts- The assessee being resident corporate assessee is engaged in purchases rice. The assessee purchases rice from various states and repacks the same in its own containers. The assessee made purchases from various parties and made cash payment in excess of Rs. 20,000 per day in violation of provisions of section 40A(3). During the year, the payment aggregated to Rs. 306.67 Lacs.
CIT(A) deleted the impugned addition observing that as per Rule 6DD(e)(i), payment for agriculture produce would be exempt from disallowance u/s 40A(3). The payment was made by the assessee in cash as per regular market practice.
Being aggrieved, revenue has preferred the present appeal.
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