Sharanappa S. Alur, V. JCIT,

ITA 1237/BANG/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5263 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G KAMALADAR HEARD ON
• Keywords: Question of law; Commercial expediency
• Section: 40A(3); 154

Judgement Text

ITA.1237/BANG/2013 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL, JUDICIAL MEMBER I.T.A NO.1237/BANG/2013 (ASSESSMENT YEAR : 2009-10) SHRI. SHARANAPPA S. ALUR, K. K. COLONY, JALANAGAR, BIJAPUR - 586 101 .. APPELLANT PAN : ABKPA2058H V. JOINT COMMISSIONER OF INCOME-TAX, BIJAPUR RANGE, BIJAPUR .. RESPONDENT ASSESSEE BY : SHRI. NARENDRA SHARMA, ADVOCATE REVENUE BY : SHRI. G. KAMALADAR, STANDING COUNSEL HEARD ON : 18.04.2017 PRONOUNCED ON : 09.06.2017 O R D E R PER LALIT KUMAR, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE O RDER OF THE CIT (A), BELGAUM, DT.15.04.2013, FOR THE ASSESSMENT YEAR 200 9-10. ITA.1237/BANG/2013 PAGE - 2 02. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL BEFORE US : ITA.1237/BANG/2013 PAGE - 3 03. GROUND NO1, HAS NOT BEEN PRESSED BY THE ASSESSE E AND IS THEREFORE DISMISSED AS NOT PRESSED. WE SHALL BE DECIDING ALL THE REMAINING ISSUES COLLECTIVELY AS THEY INTERRELATED AND INTERDEPENDEN T. THE ASSESSEE IS A CIVIL CONTRACTOR CARRYING ON CIVI L CONSTRUCTION WORK FOR THE GOVERNMENT DEPARTMENTS WITHIN THE STATE OF KARNATAK A. HE FILED HIS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1,18,98,89 0/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE ASSES SMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS INCURRED HUGE EXPE NSES IN CASH FOR THE PAYMENT OR AN AGGREGATE PAYMENT MADE TO ONE PARTY I N A DAY WHICH EXCEEDED RS.20,000/-. THUS IT WAS IN VIOLATION OF SECTION 40A(3) OF THE ACT, AND THEREFORE, GAVE A NOTICE MENTIONING THE FO LLOWING : S. NO. NAME OF PARTY AMOUNT DISALLOWABLE U/S.40A(3) 1 M/S. SUJAL TRADERS (PURCHASE OF CEMENT) RS. 77,2 3,933 2 M/S. SANGAM SALES CORPORATION (PURCHASE OF CEMENT) RS. 36,79,555 3 M/S. PATIL PETROLEUM (PETROL PURCHASE) RS. 14,80 ,000 4 OTHERS (CEMENT, PETROL, RD MATERIALS ETC) RS. 28 ,60,869 TOTAL RS.1,57,44,357 ITA.1237/BANG/2013 PAGE - 4 IN RESPONSE TO THE NOTICE, ASSESSEE FILED A REPLY A ND SUBMITTED AS UNDER : THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND HAS, THEREFORE, DISALLOWED AN AMOUNT OF RS.1,57,44, 357/- U/S.40A(3) OF THE ACT. BEING AGGRIEVED BY THE ORDER PASSED BY THE AO , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). 04. THE CIT (A) VIDE ORDER DT.15.03.2013, DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE DISALLOWANCE OF RS.1,57, 44,357/- MADE BY THE AO. BEING AGGRIEVED BY THE ORDER PASSED BY THE CIT (A), ASSESSEE IS IN APPEAL BEFORE US, ON THE GROUNDS STATED HEREIN ABOV E. 05. BEFORE US, THE LD. AR SUBMITTED THAT THE ASSESS EE IS A CIVIL CONTRACTOR CARRYING ON CIVIL WORKS FOR PUBLIC WORKS DEPARTMENT AND THE ACTIVITIES OF THE ASSESSEE ARE CONFINED TO VARIOUS PARTS OF BIJAP UR DISTRICT, KARNATAKA . ITA.1237/BANG/2013 PAGE - 5 HE SUBMITTED THAT THE DETAILED SUBMISSIONS WERE FIL ED BY THE ASSESSEE IN THE PAPER BOOK FROM PAGES 18 TO 33 SHOWING THAT THE PUR CHASES WERE MADE FOR RAW-MATERIAL AND CONSUMABLES IN THE NORMAL COURSE O F BUSINESS. THE LD. AR FURTHER SUBMITTED THAT THE SAID SUBMISSIONS WERE MADE BEFORE THE LOWER AUTHORITIES ALSO AND THAT THE CIT (A), HOWEVER LD C IT (A) WITHOUT CALLING FOR THE REMAND REPORT FROM THE AO IN RESPECT OF THE SUBMISSIONS MADE BEFORE HIM (PAPER BOOK PAGES 18 TO 64), HAS DISMISS ED THE APPEAL OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE AUTHORITI ES BELOW HAVE FAILED TO APPRECIATE THE BUSINESS EXIGENCIES AND OTHER RELEVA NT FACTORS OF THE TRADE OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE AS SESSEE IS IN THE BUSINESS OF CONSTRUCTION OF ROAD, BRIDGE AND CIVIL CONTRACT FOR PWD, ON ACCOUNT OF BUSINESS EXIGENCIES, EXPEDIENCY AND PRACTICAL NECES SITIES, IT WAS INCUMBENT UPON THE ASSESSEE TO MAKE SEVERAL PAYMENTS TO THE V ENDORS FOR PURCHASE OF CEMENT, REFILLING OF DIESEL IN THE VEHICLES, FOR WH ICH CASH PAYMENT WAS REQUIRED TO BE MADE. IT WAS ALSO SUBMITTED THAT TH E CASE OF THE ASSESSEE COMES WITHIN THE SCOPE OF COMMERCIAL EXPEDIENCY UND ER RULE 6DD OF IT RULES. THE ASSESSEE HAS SUBMITTED THAT HE HAS UNDE RTAKEN TEN CIVIL CONTRACTS AS UNDER, DURING THE YEAR UNDER CONSIDERA TION: ITA.1237/BANG/2013 PAGE - 6 1. ALMATTI TO BAGALKOT CONSTRUCTION OF ROADS AND BRIDGES; 2. RELIANCE TOWER PROJECTS ; 3. GULBARGA DEVELOPMENT AUTHORITY DEVELOPMENT OF SITES ; 4. KNNL DHARWAD CONSTRUCTION OF ROADS AND BRIDGES ; 5. NH DIVISION BIJAPUR CONSTRUCTION OF ROADS AND BRIDGES ; 6. PRE DIVISION BIJAPUR CONSTRUCTION OF ROADS AND BRIDGES ; 7. PMGSY FORMATION OF ROADS IN AND AROUND MUDDEBIHA L AND INDI TALUKS ; 8. PRE DIVISION BAGALKOT CONSTRUCTION OF ROADS AN D BRIDGES ; 9. PROJECT WORK IN BIJAPUR DIVISION CONSTRUCTION OF ROADS AND BRIDGES ; 10.PWP & WT BAGALKOT DIVISION CONSTRUCTION OF ROA DS AND BRIDGES. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS UNDE R TAKEN THE PROJECTS AT LOCATIONS OUTSIDE THE PLACE WHERE HE IS STATIONED, THEREFORE, CASH PAYMENTS WERE MADE FOR THE PURCHASE OF CEMENT, DIESEL, ETC., IT WAS FURTHER SUBMITTED THAT THE AO HAS NOT DISPUTED THE GENUINENESS OF THE PAYMENTS BUT HAS ONLY DISALLOWED THE DEDUCTION U/S.40A(3) AS THE PAYMENT MADE IN CASH IN ONE DAY WAS EXCEEDING RS.20,000/- TO ONE PERSON. IT W AS SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE CASH PAYMENTS MADE BY THE ASSESSEE. DURING THE COURSE OF ARGUMENT, THE ASSES SEE DRAWN OUR ATTENTION TO THE TABULATED STATEMENTS PLACED AT PAGES 34 TO 6 4 OF THE PAPER BOOK TO SHOW THAT IN VARIOUS CASES THE CASH PAYMENTS WERE M ADE ON WEEKLY OFF, SUNDAYS AND GAZETTED HOLIDAYS. IT WAS SUBMITTED TH AT THESE PAYMENTS WERE EVEN OTHERWISE REQUIRED TO BE ALLOWED BEING MADE ON WEEKLY OFF, SUNDAYS AND GAZETTED HOLIDAYS. ITA.1237/BANG/2013 PAGE - 7 06. THE LD. AR RELIED UPON THE JUDGMENT OF THE BENG ALURU TRIBUNAL IN THE CASE OF M/S. RANKA & RANKA V. JCIT [ITA NO.578/ BANG/2002, DT.04.07.2005] AND HAS REQUESTED THAT THE ORDER PAS SED BY THE LOWER AUTHORITIES IS REQUIRED TO BE SET ASIDE. THE LD AR RELIED UPON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. CHAUDHARY & CO [(1996) 217 ITR 431] AND ALSO ON THE JUDGMENT OF HO NBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF ACIT V. SRI SARASWATI I RON FOUNDRY [(2006) 287 ITR 313]. 07. IN THE ALTERNATIVE, IT WAS SUBMITTED THAT AN AM OUNT OF RS.29,38,968/- IS REQUIRED TO BE ALLOWED BEING THE AMOUNT PAID ON HOLIDAYS IN VIEW OF RULE 6DD OF THE IT RULES R.W.SECTION 40A(3) OF THE ACT. 08. ON THE OTHER HAND, THE LD. DR HAS DRAWN OUR ATT ENTION TO RULE 6DD OF THE IT RULES TO SHOW THAT THE CASE OF THE ASSESS EE IS NOT COVERED BY ANY OF THE EXCEPTIONS MENTIONED IN RULE 6DD AND HAS SUB MITTED THAT THE APPEAL OF THE ASSESSEE REQUIRES TO BE DISMISSED. 09. WE HAVE GONE THROUGH THE RECORD, PAPER BOOK, WR ITTEN SUBMISSIONS AND CONSIDERED THE ARGUMENTS ADDRESSED BY THE RESPE CTIVE PARTIES. IT IS AN ADMITTED POSITION AS DISCERNIBLE FROM THE ORDER PAS SED BY THE AO THAT THE AMOUNT OF RS.77,23,933/- WAS PAID TO M/S. SUJAL TRA DERS FOR PURCHASE OF ITA.1237/BANG/2013 PAGE - 8 CEMENT, A SUM OF RS.36,79,555/- WAS ALSO PAID TO M/ S. SANGAM SALES CORPORATION FOR PURCHASE OF CEMENT AND THE SUM OF R S.14,80,000/- WAS PAID TO M/S. PATIL PETROLEUM FOR PURCHASE OF PETROL . RS.28,60,869/- WAS SPENT FOR PURCHASE OF CEMENT, PETROL ETC., THUS, I N OUR OPINION, THE AO HAS NOT DISPUTED EITHER THE GENUINENESS OF THE TRANSACT ION OR HAS NOT DISPUTED THE PERSON TO WHOM PAYMENT IN CASH WAS MADE BY THE ASSESSEE. THE AO HAS ONLY DISALLOWED THE DEDUCTION IN VIEW OF SECTIO N 40A(3) OF THE ACT RULE 6DD OF THE IT RULES. IN OUR VIEW, ONCE THE AO HAS NOT DISPUTED THE IDENTITY OF THE PERSON TO WHOM THE PAYMENT WAS MADE AND HAS ALSO NOT DISPUTED THE BUSINESS EXIGENCY, THE DISALLOWANCES M ADE BY THE AO IS NOT SUSTAINABLE IN THE EYES OF LAW. IN THE IDENTICAL F ACTS AND CIRCUMSTANCES OF THE CASE, HONBLE DELHI HIGH COURT IN THE MATTER OF HONEY ENTERPRISES V. CIT [ITA.163/2002, DT.08.12.2015, IN PARA 26 TO 37, HELD AS UNDER : 26. THE REVENUE DID NOT ACCEPT THE CIT(A)'S DECISIO N AND PREFERRED APPEALS BEFORE THE ITAT. THE ITAT DID NOT ACCEPT TH E VIEW THAT THE PAYMENTS IN QUESTION WERE OUTSIDE THE SCOPE OF SECTION 40A(3) OF THE ACT; HOWEVER, THE ITAT ACCEPTED THE CONTENTION THAT SUCH PAYMENTS HAD BEEN MADE ON ACCOUNT OF EXIGENCIES OF BUSINESS. THE ITAT FURTHER OBSERVED THAT THE RIGOURS OF SECTION 40A(3) OF THE ACT HAD BEEN RELAXED BY VIRTUE OF RULE 6DD OF THE RULES AS WELL AS CBDT CIRCULAR NO. 220 DATED 31 ST MAY, 1977 AND THE INSTANCES INDICATED I N THE CIRCULAR WERE NOT EXHAUSTIVE. 27. THE LEARNED COUNSEL APPEARING FOR THE REVENUE S UBMITTED THAT ALTHOUGH THE IDENTITY OF THE RECIPIENTS OF CASH PAY MENTS AS WELL AS GENUINENESS OF THE TRANSACTIONS WAS NOT DISPUTED, T HE ASSESSEE HAD FAILED ITA.1237/BANG/2013 PAGE - 9 TO ESTABLISH EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANC ES, WHICH COMPELLED THE ASSESSEE TO MAKE SUCH PAYMENTS IN CASH. HE SUBM ITTED THAT IN THE ABSENCE OF ESTABLISHING EXTRAORDINARY CIRCUMSTANCES , THE PAYMENTS MADE IN CASH WERE LIABLE TO BE ADDED TO THE INCOME OF TH E ASSESSEE BY VIRTUE OF SECTION 40A(3) OF THE ACT. 28. COUNTERING THE SUBMISSIONS MADE ON BEHALF OF TH E REVENUE, MS KAPILA SUBMITTED THAT NOT ONLY THE GENUINENESS OF T HE TRANSACTIONS HAD BEEN ESTABLISHED BUT THE ITAT HAD ALSO ACCEPTED, AS A FACT, THAT SUCH PAYMENTS WERE NECESSARY IN THE COURSE OF CONDUCTING BUSINESS. SHE ALSO CONTENDED THAT IT WAS NECESSARY TO LOOK AT THE CIRC UMSTANCES UNDER WHICH PAYMENTS HAD BEEN MADE AND BY KEEPING IN VIEW OF TH E COMMERCIAL CONSTRAINTS AND THE PRACTICALITY OF THE CIRCUMSTANC ES WHICH HAD TO BE DEALT WITH BY THE ASSESSEE AS A BUSINESSMAN. SHE EM PHASISED THAT THE ASSESSEE HAD MADE PAYMENTS IN CASH KEEPING IN MIND THE COMMERCIAL NECESSITY AND THE PRACTICALITY OF THE BUSINESS. 29. BEFORE CONSIDERING THE RIVAL CONTENTIONS, IT IS NECESSARY TO OBSERVE (I) THAT THERE IS NO DISPUTE AS TO THE IDENTITY OF THE PRODUCERS TO WHOM CASH PAYMENTS HAVE BEEN MADE BY THE ASSESSEE; AND (II) T HAT THE PAYMENTS WERE MADE BONAFIDE AND IN CONSIDERATION OF A GENUIN E TRANSACTIONS AS ADVANCES EITHER FOR PROCESSING THE POSITIVES OF THE FILM OR ACQUIRING THE RIGHTS OF EXHIBITION OF FEATURE FILMS. THUS, INDISP UTABLY, SUCH PAYMENTS WERE ALLOWABLE AS DEDUCTION BEING REVENUE EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS. THE ONLY ISSUE TO BE CONS IDERED IS WHETHER THE SAME HAVE TO BE DISALLOWED BY VIRTUE OF SECTION 40A(3) OF THE ACT BECAUSE THE SAME WERE MADE IN CASH. 30. SECTION 40A(3) OF THE ACT AS IN FORCE DURING THE AYS 1992-93 AND 1993-94 READS AS UNDER:- '(3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN R ESPECT OF WHICH PAYMENT IS MADE, AFTER SUCH DATE (NOT BEING LATER T HAN THE 31ST DAY OF MARCH, 1969) AS MAY BE SPECIFIED IN THIS BEHALF BY THE CENTRAL GOVERNMENT BY NOTIFICATION IN THE OFFICIAL GAZETTE, IN A SUM EXCEEDING TEN THOUSAND RUPEES OTHERWISE THAN BY A CROSSED CHE QUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT, SUCH EXPENDITURE SHALL NOT BE ALLOWED AS A DEDUCTION: PROVIDED THAT WHERE AN ALLOWANCE HAS BEE N MADE IN THE ASSESSMENT FOR ANY YEAR NOT BEING AN ASSESSMENT YEA R COMMENCING PRIOR TO THE 1ST DAY OF APRIL, 1969, IN RESPECT OF ANY LI ABILITY INCURRED BY THE ASSESSEE FOR ANY EXPENDITURE AND SUBSEQUENTLY DURIN G ANY PREVIOUS YEAR THE ASSESSEE MAKES ANY PAYMENT IN RESPECT THEREOF I N A SUM EXCEEDING TEN THOUSAND RUPEES OTHERWISE THAN BY A CROSSED CHE QUE DRAWN ON A BANK ITA.1237/BANG/2013 PAGE - 10 OR BY A CROSSED BANK DRAFT, THE ALLOWANCE ORIGINALL Y MADE SHALL BE DEEMED TO HAVE BEEN WRONGLY MADE AND THE ASSESSING OFFICER MAY RECOMPUTE THE TOTAL INCOME OF THE ASSESSEE FOR THE PREVIOUS YEAR IN WHICH SUCH LIABILITY WAS INCURRED AND MAKE THE NECESSARY AMENDMENT, AND THE PROVISIONS OF SECTION 154 SHALL, SO FAR AS MAY BE, APPLY THERETO, THE PERIOD OF FOUR YEARS SPECIFIED IN SUB-SECTION (7) O F THAT SECTION BEING RECKONED FROM THE END OF THE ASSESSMENT YEAR NEXT F OLLOWING THE PREVIOUS YEAR IN WHICH THE PAYMENT WAS SO MADE: PROVIDED FURTHER THAT NO DISALLOWANCE UNDER THIS SU B-SECTION SHALL BE MADE WHERE ANY PAYMENT IN A SUM EXCEEDING TEN THOU- SAND RUPEES IS MADE OTHERWISE THAN BY A CROSSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT, IN SUCH CASES AND UNDER SUCH CI RCUMSTANCES AS MAY BE PRESCRIBED, HAVING REGARD TO THE NATURE AND EXTE NT OF BANKING FACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AN D OTHER RELEVANT FACTORS.' 31. RULE 6DD OF THE RULES EXPRESSLY PROVIDES THAT N O DISALLOWANCE UNDER SUB-SECTION 3 OF SECTION 40A SHALL BE MADE, INTER A LIA, IN CIRCUMSTANCES SPECIFIED THEREUNDER. CLAUSE (J) OF RULE 6DD OF THE RULES (AS APPLICABLE DURING THE RELEVANT ASSESSMENT YEARS) EXPRESSLY PRO VIDED THAT NO DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT WOULD BE MADE IN CASES WHERE THE ASSESSEE FURNISHES EVIDENCE TO THE SATISF ACTION OF THE INCOME- TAX OFFICER AS TO THE GENUINENESS OF THE PAYMENT AN D THE IDENTITY OF THE PAYEE. AND, THE ASSESSEE FURTHER SATISFIES THE INCO ME-TAX OFFICER THAT PAYMENT COULD NOT BE MADE BY CROSSED CHEQUE DRAWN O N A BANK OR BY A CROSSED BANK DRAFT '(A) DUE TO EXCEPTIONAL OR UNAVO IDABLE CIRCUMSTANCES; OR (B) BECAUSE PAYMENTS IN THE MANNER AFORESAID WAS NOT PRACTICABLE, OR WOULD HAVE CAUSE GENUINE DIFFICULTY TO THE PAYEE, H AVING REGARD TO THE NATURE OF TRANSACTION AND THE NECESSITY FOR EXPEDIT IOUS SETTLEMENT THEREOF.' 32. APPARENTLY, SEVERAL REPRESENTATIONS WERE RECEIV ED BY THE CBDT REGARDING DIFFICULTIES THAT WERE BEING FACED BY TAX PAYERS DUE TO THE LACK OF UNIFORMITY IN THE INTERPRETATION OF THE AFORESAI D RULE. IN THE CIRCUMSTANCES, THE CBDT ISSUED A CIRCULAR - BEING C IRCULAR NO. 220 DATED 31ST MAY, 1977, INTER ALIA, PROVIDING AS UNDE R:- '4. ALL THE CIRCUMSTANCES IN WHICH THE CONDITIONS L AID DOWN IN RULE WOULD BE APPLICABLE CANNOT BE SPELT OUT. HOWEVER, S OME OF THEM WHICH WOULD SEEM TO MEET THE REQUIREMENTS OF THE SAID RUL E ARE ; ITA.1237/BANG/2013 PAGE - 11 (I) THE PURCHASER IS NEW TO THE SELLER ; OR (II) THE TRANSACTIONS ARE MADE AT A PLACE WH ERE EITHER THE PURCHASER OR THE SELLER DOES NOT HAVE A BANK ACCOUNT; OR (III) THE TRANSACTIONS AND PAYMENTS ARE MADE ON A B ANK HOLIDAY ; OR (IV) THE SELLER IS REFUSING TO ACCEPT THE PAYMENT BY WAY OF CROSSED CHEQUE/DRAFT AND THE PURCHASER'S BUSINESS INTEREST WOULD SUFFER DUE TO NON- AVAILABILITY OF GOODS OTHERWISE THAN FROM THIS PARTICULAR SELLER ; OR (V) THE SELLER, ACTING AS A COMMISSION AGENT, IS RE QUIRED TO PAY CASH IN TURN TO PERSONS FROM WHOM HE HAS PURCHASED THE GOOD S; OR (VI) SPECIFIC DISCOUNT IS GIVEN BY THE SELLER FOR P AYMENT TO BE MADE BY WAY OF CASH.' 33. CBDT FURTHER CLARIFIED THAT 'THE ABOVE CIRCUMST ANCES ARE NOT EXHAUSTIVE BUT ILLUSTRATIVE. THERE COULD BE CASES O THER THAN THOSE FALLING WITHIN THE ABOVE CATEGORIES WHICH WOULD ALSO MEET T HE REQUIREMENTS OF RULE' 34. THE ITAT HAD CONSIDERED THE ABOVE MENTIONED CBD T CIRCULAR AND HAD RIGHTLY CONCLUDED THAT THE CIRCUMSTANCES AS SPE LT OUT IN CBDT CIRCULAR NO. 220 (SUPRA) WERE NOT EXHAUSTIVE BUT WE RE MERELY ILLUSTRATIVE OF SITUATIONS WHERE BUSINESS EXIGENCIES REQUIRED TH AT THE PAYMENTS BE MADE IN CASH. THE ITAT ALSO REFERRED TO THE DECISIO N OF THE GUJARAT HIGH COURT IN HASANAND PINJOMAL V. CIT : (1978) 112 ITR 134 (GUJ.) WHEREIN THE COURT HAD OBSERVED THAT THE PRACTICABILITY WOUL D HAVE TO BE JUDGED FROM THE ANGLE OF A BUSINESSMEN AND NOT THE REVENUE . 35. IN THE PRESENT CIRCUMSTANCES NEITHER THE GENUIN ENESS OF THE PAYMENT NOR THE IDENTITY OF THE PAYEE IS DISPUTED. THE ONLY CONTROVERSY THAT NEEDS TO BE ADDRESSED IS WHETHER THE ITAT'S DECISION THAT SUCH PAYMENTS HAD BEEN MADE BY THE ASSESSEE ON ACCOUNT OF BUSINESS EX IGENCIES IS PERVERSE. 36. IN THE PRESENT CASE, THE AO DOES NOT DISPUTE TH AT THE ASSESSEE CARRIED ON ITS BUSINESS IN DELHI AND ITS OFFICERS HAD TO TR AVEL TO BOMBAY TO NEGOTIATE THE PURCHASE OF DISTRIBUTION RIGHTS. THE ASSESSEE HAD ALSO CONTENDED THAT SUCH PAYMENTS WERE MADE AS THE PRODU CERS REQUIRED THE PAYMENTS URGENTLY AT VARIOUS SITES WHERE FILMS BEIN G PRODUCED BY THEM WERE BEING SHOT AND IT WAS EXPECTED THAT SUCH PAYME NTS BE MADE IN CASH IN THE NORMAL COURSE OF CONDUCTING BUSINESS. 37. IN OUR VIEW, THE QUESTION WHETHER THE ASSESSEE' S BUSINESS EXIGENCIES REQUIRED PAYMENTS TO BE MADE IN CASH, IS A QUESTION OF FACT. THE ITAT ITA.1237/BANG/2013 PAGE - 12 HAS RETURNED A FINDING IN FAVOUR OF THE ASSESSEE AN D IT IS NOT POSSIBLE TO CONCLUDE THAT SUCH FINDING IS WITHOUT ANY BASIS OR ANY MATERIAL ON RECORD. THE ITAT'S DECISION, THUS, CANNOT BE HELD TO BE PER VERSE. ACCORDINGLY, THE QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE AS SESSEE AND AGAINST THE REVENUE. 10. IN THE LIGHT OF THE ABOVE, WE THEREFORE, DEEM I T APPROPRIATE TO REMAND BACK THE MATTER TO THE FILE OF THE CIT (A) TO DECID E THE ISSUES 2-6 IN THE PRESENT APPEAL AFRESH, CONSIDERING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT REFERRED TO HEREIN ABOVE, AFTER SEEKING REMAN D REPORT FROM THE AO ON THE DOCUMENTS FORMING PART OF THE PAPER BOOK, FROM PAGES 34 TO 64 , SO AS TO EXAMINE THE BUSINESS EXIGENCY. IF ON EXAMINING T HE DOCUMENTS AND AFTER SEEKING THE REMAND REPORT FROM THE ASSESSING OFFICE R, THE AUTHORITIES COMES TO THE CONCLUSION THAT THERE WAS BUSINESS EXIGENCIE S FOR MAKING THE PAYMENT IN CASH THEN THE AUTHORITY SHALL ALLOW THE DEDUCTION OF SUCH PAYMENT. THE CIT(A) IS ALSO DIRECTED TO EXAMINE TH E CLAIM OF THE ASSESSEE IN RESPECT OF A CASH PAYMENT MADE ON HOLIDAYS FOR A N AMOUNT OF RS.29,38,968/-. IN TERMS OF RULE 6 DD OF INCOME TAX RULES. IF THE LD CIT(A) COMES TO THE CONCLUSION THAT THE PAYMENT IN CASH WAS MADE ON THE HOLIDAYS AND THERE WAS A URGENCY AND REQUIREMENT OF BUSINESS THEN THE DEDUCTION OF PAYMENT MADE ON THE HOLIDAYS SHALL BE ALLOWED BY HIM . ITA.1237/BANG/2013 PAGE - 13 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF JUNE, 2017. SD/- SD/- (INTURI RAMA RAO) (LALIT KUMAR) ACCOUNTANT MEMBER JUDICIAL M EMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR