Hyderabad Race Club, Hyderabad V. DCIT, Cir-2(2), Hyderabad

ITA 312/HYD/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7513 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: K A SUBBA RAOJI; SSH K C DEVADAS
• Keywords: Rejection of books of accounts; Business expenditure; Maximum Marginal Rate; Reasonable cause; Ignorance of law
• Section: 40A(3); 143(3); 37(1); 201(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.313/HYD/2011 ASSESSMENT YEAR 2004-05 ITA.NO.312/HYD/2011 ASSESSMENT YEAR 2005-06 ITA NO.1059/HYD/2011 ASSESSMENT YEAR 2006-0 7 ITA.NO.1425/HYD/2011 ASSESSMENT YEAR 2007-0 8 M/S HYDERABAD RACE CLUB, HYDERABAD. ( PAN AAACH 2773 C) VS THE ACIT, CIRCLE 2 (2), HYDERABAD APPELLANT RESPONDENT ITA NO.894/HYD/2011 ASSESSMENT YEAR 2006-07 ITA NO.1569/HYD/2011 ASSESSMENT YEAR 2007-08 ITA NO.1946/HYD/2011 ASSESSMENT YEAR 2005-06 THE ACIT, CIRCLE 2 (2), HYDERABAD VS M/S HYDERABAD RACE CLUB, HYDERABAD. ( PAN AAACH 2773 C) APPELLANT RESPON DENT APPELLANT BY : S/SH. K.C. DEVADAS & K.A. SUBBA RAOJI RESPONDENT BY : SHRI V. SRINIVAS DATE OF HEARING : 5.1.2012 DATE OF PRONOUNCEMENT : 7.3.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THESE ARE CROSS APPEALS PREFERRED BY THE ASSES SEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST DIFFERENT ORDERS P ASSED BY THE CIT(A) III, HYDERABAD AND ARE PERTAINING TO THE AS SESSMENT YEARS 2004-05, 2005-06, 2006-07 AND 2007-08. SINCE ISSUES INVOLVED IN THESE APPEALS ARE COMMON IN NATURE, THE Y ARE ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 2 CLUBBED, HEARD AND DISPOSED OFF TOGETHER FOR THE SA KE OF CONVENIENCE. ITA NO 1425/ H/11: AY 2007-08 ASSESSEE'S APPEAL : 2. THE FIRST ISSUE IS AGAINST THE DISALLOWANCE OF RS. 36,47,05.035/- BEING 15% OF THE TOTAL WINNING PAYM ENTS MADE TO PUNTERS. THE CIT(A) ON APPEAL RESTRICTED THE DIS ALLOWANCE TO 10% OBSERVING AS UNDER: 3. THE EXPENDITURE INCURRED BY WAY OF CASH IS GENUI NE OR NOT. THE CASH PAYMENTS CONSISTS PAYMENTS OF RS.2500/- AN D BELOW RS.2500/-. IN RESPECT OF CASH PAYMENTS ABOVE RS.25 00/- IN RESPECT OF CASH PAYMENTS ABOVE RS.2500/- THE ASSESS EE HAS MAINTAINED PROPER RECORD OF RECEIPTS, NAME & ADDRE SS ETC. IN RESPECT OF PAYMENTS LESS THAN RS.2500/- NO PROPER R ECORD TO IDENTIFY THE PAYEE IS AVAILABLE/PRODUCED. THE AO OBSERVED THAT THE ASSESSEE IS UNABLE TO PRODUCE NAMES AND AD DRESS OF THE PAYEES, WITHOUT WHICH THE GENUINENESS OF PAYMENT CO ULD NOT BE VERIFIED. BEFORE THE AO IT WAS SUBMITTED BY THE AS SESSEE THAT SUCH PAYMENTS MADE TO THE WINNING PUNTERS WAS NOT T HEIR EXPENDITURE AT ALL (ON THE BASIS OF METHOD OF ACCOU NTING FOLLOWED BY THEM). FURTHER, THE CLAIM IS FOUND TO BE NOT I N CONSONANCE WITH LAW AND IN ACCORDANCE WITH ACCEPTED LEGAL PROV ISIONS, ALL THE COLLECTIONS MADE BY SALE OF TICKETS IS TREATED AS THE INCOME/RECEIPTS AND ALL THE PAYMENTS MADE TO THE WI NNING PUNTERS IS THE EXPENDITURE. THEREFORE, THE ASSESSE E PLEADED THAT IT WAS NOT THEIR EXPENDITURE AND IT IS NOT BOUND TO PRODUCE ANY PROOF FOR SUCH EXPENDITURE. 4. HENCE, AO ASKED THE ASSESSEE WAS ASKED TO PRODU CE COMPLETE DETAILS OF PAYEES. WHEN THE ASSESSEE WAS ASKED TO PRODUCE INFORMATION INSTEAD OF PRODUCING THE REQUIR ED INFORMATION, THE ASSESSEE STATED THAT THE FACTS AR E SAME AS IN ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 3 EARLIER YEARS I.E. ASSESSMENT YEAR 2004-05 AND 2005 -06 AND THAT EVERYTHING WAS COMPUTERIZED. IT WAS POINTED OUT BY THE ASSESSEE THAT THE TRIBUNAL ON SIMILAR FACTS AND CIRCUMSTANC ES, HAS DELETED THE DISALLOWANCE. 5. THE AO OBSERVED THAT IT IS TRUE THAT THE TRIB UNAL HAS DELETED THE ADHOC DISALLOWANCE. HOWEVER, THE DEPAR TMENT HAS NOT ACCEPTED THE CONTENTION OF THE TRIBUNAL AND THE MATTER IS PENDING BEFORE THE HONBLE HIGH COURT. THE AO POIN TED OUT THAT EVEN THOUGH, THE ASSESSEE WAS ASKED TO PRODUCE ALL THE INFORMATION, IT HAS FURNISHED THE COMPUTERIZED DETA ILS AND WINDOW REPORT FOR ONLY ONE DAY I.E. FOR 25.9.2006. FURTHER, THE STATEMENTS PRODUCED DO NOT CONTAIN EVEN NAMES OF RE CEIPT AND IT ONLY CONTAINS CERTAIN ARITHMETICAL ADDITIONS AND SU BTRACTION OF COURSE BESIDES SHOWING THE DETAILS OF COUNTER NO. T ICKET NO. ETC. IN THE LIGHT OF ABOVE AND IN VIEW OF THE ASSESSEES INABILITY TO PRODUCE THE NAME AND ADDRESS OF THE PAYEES, 15% OF RS.243,13,66,899/- AMOUNTING TO RS.36,47,05,035/- I S DISALLOWED. THEREFORE, THE AO CONCLUDED THAT IN AD DITION TO THE REASONS RECORDED IN THE ASSESSMENT ORDER FOR THE AS SESSMENT YEAR 2004-05 AND 2005-06 WHICH MAY BE TREATED AS PA RT AND PARCEL OF THIS ORDER, RELIANCE IS PLACED ON HONBLE ALLAHABAD HIGH COURT DECISION IN THE CASE OF MOTILAL PADAMPAT UDYO G LTD. VS. CIT 187 ITR 515 (ALL) WHERE IN IT WAS HELD THAT WH ERE THE ASSESSEE FAILED TO ADDUCE PROOF WITH REGARD TO THE GENUINENESS OF PURCHASE TRANSACTIONS, ALTHOUGH IT HAS BEEN GIVEN A MPLE OPPORTUNITY TO DO SO, THE ADDITION ON THAT COUNT WA S HELD JUSTIFIED, FOR THE ASSESSMENT YEAR 2006-07 ALSO, SI MILAR DISALLOWANCE AMOUNTING TO RS.27,61,88,893/- HAS BEE N MADE ON ACCOUNT OF UNVERIFIABLE EXPENDITURE. 6. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 4 THE CIT(A) OBSERVED THAT EVEN DURING THE APPEAL BEF ORE HIM, THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH FURTHER INFORMATION/CLARIFICATION WITH REFERENCE TO SUCH OB SERVATIONS MADE BY THE AO. THE CIT(A) HELD THAT EVEN THOUGH T HE ACCOUNTS OF THE ACCOUNTS PF THE ASSESSEE ARE COMPUTERIZED, I N THE ABSENCE OF ANY EXPLANATION/CLARIFICATION FURNISHED WITH REF ERENCE TO SUCH ADVERSE FINDINGS GIVEN BY THE AO IN THE ASSESSMENT ORDER. THE CIT(A) FURTHER OBSERVED THAT THE ENTIRE CLAIM OF SU CH CASH PAYMENTS MADE AT RS.243,13,66,899/- CANNOT BE ALLOW ED DEDUCTION. IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) OBSERVED THAT SOME DISALLOWANCE OUT OF SUCH CASH PAYMENTS CLAIMED AS EXPENDITURE, IS CALLED FOR IN T HIS CASE. HOWEVER, CIT(A) WAS OF THE OPINION THAT THE DISALLO WANCE MADE BY THE AO IN THE ASSESSMENT ORDER AT 15% OF SUCH CL AIM, WAS ON HIGHER SIDE AND THAT IT WOULD BE FAIR AND REASONABL E TO MAKE SUCH DISALLOWANCE AT 10% OF THE SAID CLAIM OF CASH PAYMENTS MADE AT RS.243,13,66,899/-. 7. AGGRIEVED THE ASSESSEE IS ON APPEAL BEFORE US. WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY THE ORDER OF THE ITAT IN ASSESSEE'S OWN CASE FOR THE AYS 2004 -05 AND 2005-06 IN ITA NO212, 710/HYD/08 AND 972, 973/ HYD/ 08 DATED 26.09.08. THE ITAT HAS DELETED A SIMILAR DISA LLOWANCE OBSERVING AS UNDER: AD-HOC DISALLOWANCE OUT OF WINNINGS PAYMENTS OF LES S THAN RS.2500/- EACH: BEFORE WE ADJUDICATE UPON THE NEXT ISSUE RELATING T O AD HOC DISALLOWANCE, WE WILL UNDER STAND SUB SECTION 1 OF THE SECTION 37 OF THE ACT WHICH READS AS FOLLOWS: 37: GENERAL: ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 5 1) ANY EXPENDITURE NOT BEING EXPENDITURE OF THE NAT URE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPI8TAL EXPENDITURE OR PERSONAL EXPENSES OF THE AS SESSEE, LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS, OR PROFESSION SHALL BE ALLOWE D IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROF ITS AND GAINS OF BUSINESS OR PROFESSION. EXPLANATION: FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESS EE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBI TED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR T HE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDIT URE. IN ORDER TO CLAIM THE DEDUCTION OF THE EXPENDITURE UNDER THE ABOVE SECTION OF THE ACT, THE FOLLOWING CONDITIONS SHOULD BE SATISFIED. 1. THE EXPENDITURE SHOULD NOT BE IN THE NATURE OF DESCRIBED UNDER THE SPECIFIED PROVISIONS OF SECTION 30 TO 36 2. THE EXPENDITURE SHOULD NOT BE IN THE NATURE OF C APITAL NATURE 3. THE EXPENDITURE SHOULD NOT BE A PERSONAL NATURE 4. THE EXPENDITURE SHOULD HAVE BEEN INCURRED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PRO FESSION. THUS, SECTION 37(1) ALLOWS DEDUCTION OF ANY EXPENDI TURE WHICH FULFILS THE CONDITIONS NOTED ABOVE. IN THE C ASE UNDER CONSIDERATION, PAYMENTS MADE TO WINNERS LESS THAN RS.2500/- SATISFIES ALL THE CONDITIONS MENTIONED AB OVE. THE DEPARTMENT HAS NOT BROUGHT ON RECORD TO SHOW THAT T HE SAID ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 6 EXPENDITURE NOT FULFILLED THE ABOVE CONDITIONS. IT IS NO DOUBT TRUE THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT IT FULFILS THE ABOVE CONDITIONS, MORE IMPORTANTLY, THE LAST ON E I.E. THAT IT HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. FOR THIS PURPOSE, A SSESSEE HAS TO PRODUCE NECESSARY EVIDENCE, IN THE FORM OF B ILLS AND VOUCHERS TO THE SATISFACTION OF THE ASSESSING OFFIC ER. ADMITTEDLY, THE ASSESSEE IS MAINTAINING THE ENTIRE ACTIVITY IS COMPUTERIZED ENVIRONMENT. THE ENTIRE COMPUTERIZ ED ACTIVITY RELATING IS TO ISSUE OF COMPUTERIZED TICKE TS, COMPUTERIZED WINNING TICKETS AND THE COMPUTERISED FINANCIAL ENTRIES IS EXPLAINED IN THE PAGE 37 TO 39 OF THE PAPER BOOK FURNISHED BY THE AR FOR THE ASSESSEE BEF ORE US. AS SOON AS A PUNTER PURCHASES A RACING TICKET WINDO W TERMINAL PRINTOUT, THE TICKET AND TICKET DETAILS AR E TRANSMITTED TO THE BETTING SERVER. AT THE END OF T HE DAY, AFTER WINNING AMOUNTS ARE PAID, THE ENTIRE DATA GET S COPIED INTO A FLOPPY, FOR UPLOADING THE SAME INTO THE ACCO UNTING SERVER. FROM THE ACCOUNTING SERVER, THE MAIN CASH BOOK IS GENERATED. AT THE END OF EACH RACE DAY, CASH REGIS TER REPORT IS CERTIFIED BY THE INDEPENDENT COMPANIES ACT, 1956 (1 OF 1956) AND FROM THIS, THE MAIN CASH BOOK IS GENERATE D. THE ABOVE PROCEDURE CONSISTENTLY FOLLOWED BY THE AS SESSEE APPEARS TO BE A FOOL PROOF ONE, AND CONSTITUTES A CONTEMPORANEOUS EVIDENCE. IT CLEARLY ESTABLISHES T HE PAYMENTS OF WINNING AMOUNTS OF LESS THAN RS.2500/- EACH. WHEN THE ENTIRE ACCOUNTS AND DATA ARE MAINTAINED METICULOUSLY, WITH THE COMPUTER DEPICTING EVERY MIN UTE DETAILS OF EACH EVENT AND TICKET, THERE APPEARS NO SCOPE FOR MAKING ANY AD HOC DISALLOWANCE. CONSIDERING THE PE CULIAR ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 7 FACTS AND CIRCUMSTANCES UNDER WHICH THE ASSESSEE CA RRIES ON ITS BUSINESS OF CONDUCTING THE RACES, IN WHICH M ULTITUDES OF PUBLIC AT LARGE, WHO CONSTITUTE THE CUSTOMERS OF THE ASSESSEE, TENDER THE BETTING AMOUNTS IN CASH FOR EA CH RACE/EACH EVENT, GET BACK THE WINNINGS AMOUNTS IN C ASH WITHIN MINUTES OF THE CONCLUSION OF EACH RACE EVENT , AND MAY EVEN REINVEST SUCH WINNINGS AMOUNTS ON SUCCEEDI NG RACES OF THE DAY, IT IS FOOL PROOF PROCEDURE ADOPTE D FOR RECORDING THE RECEIPTS BY WAY OF BETTINGS AND PAYME NTS ON WINNING TICKETS, THAT SHOULD BE ACCEPTED AS AN EVID ENCE IN SUPPORT OF THE CONTENTIONS OF THE ASSESSEE, THAT IT HAS FULFILLED THE CONDITIONS LAID DOWN IN S.37(1) AND E STABLISHED THAT THE EXPENDITURE IN THE FORM OF PAYMENTS ON WIN NING TICKETS, HAVE BEEN MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT MAY NOT BE FAIR OR REASONA BLE TO EXPECT IN SUCH CASES TO PRODUCE THE EVIDENCE IN SUP PORT OF SUCH PAYMENT. ASSUMING FOR A MOMENT THAT THE ASSES SEE PRODUCES, AGAINST ALL ODDS, THOUSANDS OF VOUCHERS O F SUCH PAYMENTS IN RESPECT OF EACH RACING DAY, AND FOR ALL THE RACING DAYS OF THE ENTIRE PREVIOUS YEAR, WHILE IT M AY NOT BE HUMANLY POSSIBLE TO VERIFY THE GENUINENESS OF EACH SUCH VOUCHERS, AND HE MAY STILL EXERCISE HIS PREROGATIVE BY ASKING THE ASSESSEE TO IDENTIFY AND PRODUCING THE R ECEIPT OF THE WINNINGS AMOUNTS CLAIMED TO HAVE BEEN PAID BY T HE ASSESSEE. IN NUTSHELL, DECLARED INCOME OF THE ASSESSEE IS ACC EPTED AND THE SAME HAS BEEN VERIFIED AND SCRUTINIZED BY T HE REVENUE. THERE IS NO MATERIAL ON RECORD BROUGHT OU T BY THE REVENUE TO SHOW THAT THE CASH TRANSACTIONS, LIKE NU MBER OF TICKETS SOLD, QUANTITY SOLD AND THE RATES AT WHICH THE TICKETS WERE SOLD, ARE NOT GENUINE/CORRECTLY RECORDED. THE NAMES ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 8 OF THE CUSTOMERS ARE ALSO GIVEN IN RESPECT OF THE T RANSACTION ABOVE RS.2500/-. THE ONLY THING THAT IS NOT DONE B Y THE CLUB IS THAT THE DETAILS OF THE PAYEES ARE NOT ENTE RED FOR TICKETS SALES. SINCE, HAVING REGARD TO THE NATURE OF THE TRANSACTIONS AND THE MANNER IN WHICH THEY REGARD TO THE NATURE OF THE TRANSACTIONS AND THE MANNER IN WHICH THEY HAD BEEN EFFECTED, THERE WAS NO NECESSITY TO HAVE MAINTAINED -. THE FAILURE TO MAINTAIN THE SAME CAN NOT BE REGARDED AS A CIRCUMSTANCES GIVING RISE TO A SUSPIC ION WITH REGARD TO THE GENUINENESS OF THE TRANSACTIONS. THEREFORE IT CANNOT BE SAID THAT BY NOT MAINTAINING THE NAMES OF THE PAYEE, ETC. THE ASSESSEE HAS VIOLATED THE PROVISIONS OF THE IT, SINCE IT WAS PRACTICALLY IMPO SSIBLE ON HIS PART TO DO SO. WHILE THE ASSESSEE HAS COMPARED ITS BUSINESS WITH THE BUSINESSES OF A CINEMA THEATRE AN D RESTAURANT, WHICH ALSO DEAL WITH MULTITUDES OF THE MEMBERS OF THE PUBLIC WHO ARE THEIR CUSTOMERS, THE DEPARTME NT HAS DISTINGUISHED THE BUSINESS OF THE ASSESSEE FROM THE BUSINESS OF CINEMA THEATRE AND RESTAURANT, OBSERVIN G THAT IN THOSE BUSINESSES NO PAYMENTS ARE MADE BY THE ASSESSEES IN THOSE BUSINESSES TO THEIR CUSTOMERS. THE DISTINGUISHING FEATURE BROUGHT OUT BY THE DEPARTMEN T RATHER COMES TO THE AID OF THE ASSESSEE IN AS MUCH AS THE ASSESSEE NOT ONLY RECEIVES INNUMERABLE AMOUNTS FROM THE MULTITUDE OF ITS CUSTOMERS BEFORE EACH RACING EVENT , BUT ALSO DISBURSES THE AMOUNTS DUE ON WINNING TICKETS WITHIN MINUTES OF THE CONCLUSION OF EACH RACING DAY PUTS T HE ASSESSEE IN A MORE COMPLEX POSITION THAN AN ASSESSE E IN THE CINEMA THEATRE OR RESTAURANT BUSINESS WHO INDUL GES ONLY IN MULTIPLE TRANSACTIONS OF RECEIPT OF CASH AS AGAINST THE ASSESSEE WHO INDULGES IN MULTIPLE TRANSACTIONS OF ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 9 RECEIPTS AS WELL AS PAYMENTS IN CASH. AS FAR THE NOTINGS REFERRED TO IN THE DAILY REPORT DATED 14.2.2004, WE FIND THAT THEY ARE ONLY A RECTIFICATI ON ENTRIES TO BE PASSED AND THEY HAVE NOTHING TO DO WITH THE R ECEIPTS OR PAYMENTS IN RESPECT OF RACE TRANSACTIONS. BUT T HESE ENTRIES APPEAR TO BE IMPERATIVE FOR THE BETTING TER MINAL OPERATOR TO GIVE A PROPER ACCOUNT OF HIS CASH DEALI NGS AT THE END OF THE DAY. THUS, THE NOTINGS APPEAR TO BE ONLY MINOR ABERRATIONS WHICH ARE BROUGHT TO THE NOTICE OF THE ASSESSEE CLUB. HENCE THE SAME CANNOT BE TAKEN AS DEFECTS I N THE BOOKS OF ACCOUNTS MAINTAINED BY THE CLUB. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE REVENUE WAS NOT JUSTIFIED IN DRAWING AS ADVERSE CONCLUSION AGAINST THE ASSESSEE ON A WRONG APPRECIATION OF THE NOTINGS REF ERRED IN THE DAILY REPORT. MOREOVER, THE RECASTED CLUBS INCOME SHOWN IN THE P APER BOOK PAGES 8 TO 9 CLEARLY SHOWS THAT THE PREDETERMI NED PERCENTAGE OF COMMISSION AMOUNT ON DIFFERENT RACES PLUS UNCLAIMED DIVIDENDS AND FRACTION AMOUNT FOR THE WHO LE YEAR TALLIES WITH THE INCOME REPORTED IN AUDITED IN COME AND EXPENDITURE ACCOUNT. ADMITTEDLY, THE REVENUE DID N OT DISTURB THE NEXT INCOME SHOWN BY THE ASSESSEE. HEN CE, INCOME OF THE CLUB ON THE GROUND THAT UNVERIFIABILI TY OF EXPENDITURE TO ARRIVE AT A CORRECT ESTIAMTED INCOME OF THE CLUB FOR THE RELEVANT YEAR CANNOT BE DOUBTED. IN THE LIGHT OF THE ABOVE DISCUSSION, IN THE ABSENC E OF ANY MATERIAL BROUGHT ON RECORD BY THE DEPARTMENT TO SHO W THAT THE ASSESSEE CLAIM OF PAYMENTS TO WINNING TICKETS I S INFLATED OR BASELESS OR WRONG, WE FIND NO JUSTIFICA TION FOR THE AD HOC DISALLOWANCE OUT OF WINNINGS PAYMENTS OF LES S THAN ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 10 RS.2,500/- EACH MADE BY THE ASSESSEE DURING THE YEA R. OUR VIEW IS SUPPORTED BY THE CASE LAW RELIED UPON B Y CITED BY THE ASSESSEES COUNSEL. IN CASE OF SHANKER TRAD ING CO. PVT. LTD., VS. CIT (152 TAXMAN 49) (DEL.) IT WAS HE LD THAT THE AO WAS NOT EMPOWERED TO MAKE ANY ADHOC DISALLOWANCE WITHOUT POINTING OUT DEFECTS IN VOUCHERS PRODUCED B Y THE ASSESSEE. HENCE AD HOC DISALLOWANCE MADE BY THE AO WAS DELETED BY THE TRIBUNAL. IN THE INSTANT CASE, THE A SSESSEE HAVING SATISFIED ALL THE FOUR CONDITIONS LAID DOWN U/S 37(1) OF THE ACT, BY ESTABLISHING THE FOOL PROOF NATURE O F THE ACCOUNTING PROCEDURE FOLLOWED BY IT FOR RECORDING I TS RECEIPTS AND PAYMENTS, THE AO WAS NOT JUSTIFIED IN MAKING AN Y DISALLOWANCE. IN THE CASE OF CIT VS. TRANSPORT CORPORATION OF IND IA LTD. RELIED UPON BY THE DR THE ASSESSEE HAS NOT PROVED T HE COMMERCIAL EXIGENCY THAT WARRANTED THE PAYMENTS. I N THAT CASE THE PAYMENT ITSELF WAS NOT ESTABLISHED, AND TH E DEPARTMENT TOOK A STAND THAT THE VOUCHERS SIGNED ON LY BY THE EMPLOYEES OF THE ASSESSEE COULD NOT BE ACCEPTED AS GENUINE, AS ANY NUMBER OF SUCH VOUCHERS COULD BE PRODUCED BY THE ASSESSEE TO DEFRAUD THE DEPARTMENT. SINCE IN THE CASE UNDER CONSIDERATION, THE ENTIRE PAYMENT WAS THROUGH COMPUTERIZED SYSTEM, DULY AUDITED BY THE INDEPENDENT CA AT THE END OF EACH RACING DAY, AND S INCE THE PAYMENTS WERE EFFECTED ONLY ON THE BASIS OF THE WINNING TICKET NUMBERS ETC. THROUGH THE SYSTEM OF ACCOUNTIN G FOLLOWED, THE ASSESSEE HAS PROVED ALL THE FOUR COND ITIONS NOTED ABOVE IN SUPPORT OF ITS PAYMENTS. IN THE OTH ER CASES CITED BY THE DR, THE THE CASE OF APL INDIA AND ARIH ANT ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 11 BUILDERS VS. ACIT (SUPRA), THE COURTS UPHELD THE DISALLOWANCE OF THE EXPENDITURE ON ACCOUNT OF SPEED MONEY PAID AND REJECTION OF BOOKS OF ACCOUNTS RESPECTIVEL Y. IN THE CIRCUMSTANCES, WE DELETE THE ENTIRE AD HOC DISALLOWANCE OF RS.18,04,50,000 MADE BY THE AO AS AGAINST RS.12.03 CRORES SUSTAINED BY THE CIT(A). CONSEQUENTLY, GROUNDS OF THE ASSESSEE ON THIS ISSUE ARE ALLOWED AND THE SOLITARY GROUND OF THE REVENUE IN I TS APPEAL IS REJECTED. 8. WE FIND THAT THE EARLIER ORDER OF THE ITAT HAVE ELABORATELY DEALT WITH THE ISSUE. THE DEPARTMENT HAS NOT BROUGH T ANYTHING TO SHOW THAT THE FACTS OF THE CASE ARE ANY DIFFEREN T FROM THAT FOR THE AY 2004-05 AND 2005-06 COVERED BY THE ITAT ORDE R. THE ACTIVITY OF THE ASSESSEE IS SUCH THAT THEY HAVE TO DEAL DAILY WITH NUMEROUS INDIVIDUALS IN A SHORT SPAN OF TIME WHEN T HE BETTINGS ARE ON. THEY ACCEPT BETS AND SETTLE THE WINNING AMO UNTS TO THE WINNING PUNTERS. IT WILL BE DIFFICULT TO MAINTAIN C OMPLETE DETAILS ABOUT ALL THE PERSONS. THE ENTIRE PAYMENT WAS THROU GH COMPUTERIZED SYSTEM. THE PAYMENT WAS MADE TO THE PE RSON HOLDING THE WINNING TICKET. THE DEPARTMENT HAS NOT BROUGHT TO OUR NOTICE OF ANY INSTANCE OF PAYMENT WHEN THERE WA S NO WINNING TICKET. IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEE'S OWN CASE WE DELETE THE AD HOC DISALLOWANCE OF 10% OF THE TOTAL PAYMENT FOR WINNING BETS OF LESS THAN 2500/- EACH. THE APPEAL O F THE ASSESSEE ON THIS ISSUE IS ALLOWED. 9. DISALLOWANCE U/S 40A(3): THE NEXT ISSUE IN THE ASSESSEE'S APPEAL IS AGAINST DISALLOWANCE OF RS. 30,69,356/- UNDER SEC 40A(3) OF THE I.T.ACT. THE ASSESSEE ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 12 COLLECTS BETTINGS FROM THE PUNTERS ON EACH RACE OR A COMBINATION OF RACES. WHEN THE RESULTS ARE KNOWN, THE PERSONS W ITH THE WINNING TICKETS ARE PAID THEIR WINNINGS. THE PAYMEN TS ARE MADE IN CASH. THE AO HAD APPLIED THE PROVISIONS OF SEC 4 0A(3) AND HAVE DISALLOWED 20% WINNING PAYMENTS IN EXCESS OF R S. 20,000/- AGGREGATING TO RS. 30,69,356/-. THIS WAS A RRIVED AT AS UNDER: WINNINGS PAID ON SUNDAYS RS. 40,62,113/- PAID ON SATURDAYS RS. 26,04,573/- PAID AFTER BANKING HOURS RS. 86, 80,096/- TOTAL RS.1,53,46,782/- 10. THE AO DISALLOWED 20% OF THE SAME AT RS. 30,69 ,356/- U/S 40A(3). 11. ON APPEAL THE CIT(A) CONFIRMED THE ORDER OBSER VING THAT THE HE ENTIRETY OF THE BUSINESS OPERATION IN THE CA SE OF THE ASSESSEE, SUCH WINNING PAYMENTS, MADE TO PUNTERS, O N THE WINNING TICKETS, CLEARLY CONSTITUTE BUSINESS EXPEND ITURE AND THE SAME AS SQUARELY COVERED UNDER THE PROVISIONS OF SE CTION 40A(3) OF THE ACT. THE CIT(A) CLEARLY HELD THAT PAYMENTS MADE TO PUNTERS CONSTITUTE BUSINESS EXPENDITURE, AND THAT T HE SAME SQUARELY FALL UNDER THE PROVISIONS OF SECTION 40A(3 ) OF THE ACT. SINCE THE FACTS DURING THE CURRENT YEAR ARE SAME, F OLLOWING THE SAID DECISION, THE CIT(A) HELD THAT THE WINNING PAY MENTS MADE IN THIS CASE, CONSTITUTE BUSINESS EXPENDITURE IN TH E HANDS OF THE ASSESSEE AND THE SAME ARE FULLY COVERED UNDER THE P ROVISIONS OF SECTION 40A(3) OF THE ACT. 12. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE CI T(A) THAT WITH RESPECT TO THE CLAIM OF THE ASSESSEE FOR ALLOW ING EXEMPTION ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 13 IN RESPECT OF SUCH PAYMENTS MADE ON DIFFERENT DAYS DURING THE PREVIOUS YEAR, AS PER THE PROVISIONS OF RULE 6DD(J) , NO DISALLOWANCE U/S 40A(3) OF THE ACT SHALL BE MADE, W HERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH T HE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE. THE CIT(A) HELD THAT IT IS ONLY IN RESPECT OF THOSE CASH PAYME NTS WHICH WERE MADE UNDER SUCH CIRCUMSTANCES, STIPULATED UNDER RUL E 6DD(J) THAT AN ASSESSEE CAN BE ALLOWED EXEMPTION FROM THE PURVIEW OF DISALLOWANCE U/S 40A(3). THE CIT(A) POINTED OUT THA T IN THE INSTANT CASE, AS MENTION BY THE ASSESSING OFFICER , THE BRANCH OF ING VYSYA BANK, LOCATED AT RACE COURSE, WAS OPERATI NG ON SUNDAYS. THE CIT(A) HELD THAT THOSE PAYMENTS MADE BY IT ON SUNDAYS, DURING THE PREVIOUS YEAR, CANNOT BE ALLOWE D EXEMPTION RELYING ON OBSERVATION OF THE ASSESSING OFFICER THA T THE SAID BANK, LOCATED AT RACE COURSE, WOULD NOT DENY SERVIC ES TO THE GENERAL PUBLIC INCLUDING DIFFERENT CUSTOMERS OF THE ASSESSEE COMPANY, ON ITS WORKING DAY AND SINCE ON SUNDAYS, T HE ASSESSEE HAD ACCESS TO BANKING FACILITY FROM THE OP ERATION OF THE SAID ING VYASYA BANK, LOCATED IN THEIR BUSINESS PRE MISES AND ALSO THE CUSTOMERS OF THE ASSESSEE COMPANY HAD ACCE SS TO SUCH BANK. 13. FURTHER, ON SATURDAY, CIT(A) HELD THAT IT IS A NORMAL WORKING DAY IN RESPECT OF ALL BANKS AND KEEPING IN VIEW SUCH SPECIFIC PROVISIONS OF RULE 6DD(J), NO EXEMPTION CA N BE ALLOWED IN RESPECT OF SUCH CASH PAYMENTS MADE ON OTHER WORK ING DAYS, DURING THE PREVIOUS YEAR. THEREFORE, THE CIT(A) HE LD THAT EXCLUDING ONLY THE PAYMENTS OF RS.13,31,600/- WHICH WERE MADE ON BANKING HOLIDAYS THE ASSESSING OFFICER WAS JUSTIFIED IN TAKING INTO ACCOUNT THE BALANCE PAYMENTS OF RS.1,53 ,46,783/- FOR THE PURPOSE OF COMPUTING THE DISALLOWANCE 40A(3 ) OF THE ACT. HENCE THE CIT(A) CONFIRMED SUCH DISALLOWANCE MADE BY AO AT ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 14 20% OF THAT AMOUNT I.E. AT RS.30,69,359/-. 14. AGGRIEVED THE ASSESSEE'S IS ON APPEAL BEFORE US. THE ITAT IN ITS ORDER IN ASSESSEE'S OWN CASE FOR THE AYS 200 4-05 AND 2005-06 IN ITA NO212,710/HYD/08 AND 972, 973/ HYD/0 8 DATED 26.09.08 HAD SET ASIDE THIS ISSUE WITH THE FOLLOWING OBSERVATIONS : HAD THE ABOVE CLAUSE (J), AS IT STOOD PRIOR TO 25.7 .1995, REMAINED EFFECTIVE FOR THE YEARS UNDER CONSIDERATIO N, ON THE STATUTE BOOK, THERE COULD HAVE BEEN SOME JUSTIFICAT ION FOR US TO EXAMINE WHETHER THE PAYMENTS MADE BY THE ASSESSE E. IN THE INSTANT CASE IN VIOLATION OF PROVISIONS OF S ECTION 40A(3) WERE SAVED BY THE CLAUSE (J) OF THE IT RULES . IN THE CIRCUMSTANCES, THE ONLY EXCEPTION THAT IS AV AILABLE TO THE ASSESSEE IN TERMS OF RULE 6DD, AS IT WAS ON THE STATUTE BOOK DURING THE YEARS UNDER APPEAL, IS THE ONE PRES CRIBED UNDER CLAUSE (J) WHICH REPLACED THE EARLIER ONE EXT RACTED ABOVE W.E.F. 25.7.1995, I.E. WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WER E CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE. WE DO NOT FIND MERIT IN THE CONTENTION OF THE LEARNED DR THAT NOWA DAYS MANY BANKS ARE OPERATING EVEN ON HOLIDAYS AT PLACES WHERE SUBSTANTIAL COLLECTIONS/PAYMENTS ARE INVOLVED DOES NOT HOLD FORCE BECAUSE THE RULE 6DD(J) IS VERY CLEA R AND CATEGORICAL AND DISALLOWANCE CANNOT BE MADE, WHERE PAYMENTS WERE COVERED BY THE CIRCUMSTANCES PRESCRIB ED UNDER THAT CLAUSE. THE AR ARGUED THAT ALMOST ALL THE PAYMENTS WERE MAD E ON ONLY DURING SUNDAYS AND HOLIDAYS AS THE RACES WERE ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 15 CONDUCTED DURING SUNDAYS AND HOLIDAYS. ALL THE CASE LAW EXCEPT FOR THE DECISION IN THE CAS E OF SHRI RENUKESWARA RICE MILLS (SUPRA), RELIED UPON THE AR RELATED TO THE PERIOD WHEN EARLIER FORM OF RULE 6DD CLAUSE (J), WHICH WAS OMITTED W.E.F. 27.5.1995, WAS APPLICABLE, AS SU CH THE RATIO OF THOSE CASES HAVE NO APPLICATION TO THE FAC TS OF THE PRESENT CASE. IN THE CASE OF SRI R.R. MILLS (SUPRA ) THE ASSESSEE MADE THE PAYMENT OF SUM DIRECTLY IN THE BA NK ACCOUNT OF THE PAYEE WHICH FULFILS THE CRITERIA FOR ENSURING THE OBJECT OF INTRODUCTION OF SECTION 40A(3) OF THE ACT AND AS SUCH, THE RATIO OF THAT DECISION IS ALSO NOT APPLIC ABLE TO THE FACTS OF THE PRESENT CASE. MOREOVER, THE ARGUMENTS OF AR THAT ALL THE PAYMENTS ABOVE RS.20,000 ARE SUBJECT TO DEDUCTION OF TAX AT SOURCE U/S 194BB AT THE MAXIMUM MARGINAL RATE OF 30% PLUS SURCHARGES. THUS, THE TAX IS FULLY COVERED AND PAI D TO THE GOVT. THE OBJECT OF S.40A(3) IS TO BE PREVENTED TA X EVASION. THERE IS A FORCE IN THE ARGUMENTS OF THE AR BUT WE ARE UNABLE TO ACCEPT THE SAME, SINCE DISALLOWANCE U/S 4 0A(3) OF THE ACT IS MANDATORY, UNLESS COVERED BY ANY OF THE EXCEPTIONAL CIRCUMSTANCES PRESCRIBED UNDER RULE 6DD OF THE IT ACT. CONSIDERING THE INHERENT FEATURES OF THE ASSESSEES BUSINESS AND PECULIAR FACTS AND CIRCUMSTANCES OF TH E CASE, UNDER WHICH THE ASSESSEE WAS CONSTRAINED TO MAKE PAYMENTS IN CASH WHERE HAVE WEIGHED WITH US, WHILE DELETING THE AD HOC DISALLOWANCE MADE BY REVENUE AUTHORITIES, MAY APPEAR TO JUSTIFY EVEN THE CASH PA YMENTS CAUGHT BY THE MISCHIEF OF S.40A(3). THEY MAY CONST ITUTE A REASONABLE CAUSE AND ANY DISALLOWANCE, NOT WITHSTAN DING ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 16 THOSE PECULIAR FEATURES OF THE ASSESSEES BUSINESS, AND PECULIAR CIRCUMSTANCES IN WHICH THE ASSESSEE HAS TO MAKE THE CASH PAYMENTS EXCEEDING RS.20,000 EACH, IN TERM S OF S.40A(3) OF THE ACT, MAY APPEAR TO BE HARSH. HOWEVER, AS STATED ABOVE, THE DISALLOWANCE IN TERMS OF S.40A(3) OF THE ACT IS STATUTORY, UNLESS THE PAYMEN TS ARE SAVED BY THE SECOND PROVISO TO S.40A(3) ON ACCOUNT OF THE PAYMENTS HAVING BEEN MADE IN THE CIRCUMSTANCES PRESCRIBED UNDER RULE 6DD. IN VIEW OF THE AMENDMEN T TO THE PROVISIONS OF RULE 6DD, BY VIRTUE OF OMISSION O F CLAUSE (J) W.E.F. 25.7.1995, THERE IS NO SCOPE FOR EXAMINI NG EITHER THE INHERENT FEATURES OF THE ASSESSEES BUSINESS OR THE PECULIAR CIRCUMSTANCES IN WHICH THE ASSESSEE HAD TO MAKE THE CASH PAYMENTS. IN THIS CONTEXT, WE HAVE ALSO APPREHENSIONS AS TO W HETHER THE PAYMENTS MADE TO PUNTERS COULD BE TERMED AS EXPENDITURE SO AS TO COME WITHIN THE SCOPE OF THE P ROVISIONS OF S.40A(3), BECAUSE THE OBLIGATION ON THE PART OF THE ASSESSEE TO MAKE SUCH PAYMENTS ARISES OUT OF A WAGE RING CONTRACT AND NOT A BUSINESS CONTRACT AND THE PROVIS IONS OF S. 40A(3) APPLY ONLY IN RESPECT OF PAYMENTS FOR SUP PLY OF GOODS, SERVICES OR FACILITIES, THAT ARISE OUT OF CO NTRACTUAL OBLIGATIONS UNDERTAKEN BY THE ASSESSEE IN THE NORMA L COURSE OF BUSINESS. WE OBSERVE THAT THE PAYMENTS M ADE TO PUNTERS REPRESENT MERELY MONEY LAID OUT OR PAID OUT BY WAY OF AN OBLIGATION UNDER A WAGERING CONTRACT, WHICH I S DISTINCT FROM A BUSINESS CONTRACT. IT IS MERELY A DISTRIBUT ION OF WINNINGS TO THE PUNTERS, OUT OF THE COLLECTIONS REC EIVED BEFORE A PARTICULAR RACING EVENT. THESE PUNTERS WH O GET THE PAYMENT HAVE WON THE BETTING, MERELY BY WAY OF A CH ANCE ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 17 AND THEY WERE NOT ENTITLED TO THE SAME UNDER ANY BU SINESS CONTRACT, FOR THE SUPPLY OF GOODS, SERVICES OR FACI LITIES, BEFORE THE END OF THE RACE. THEREFORE, SUCH PAYMENTS MAY NOT AMOUNT TO BUSINESS EXPENDITURE IN THE STRICT SENSE OF THAT TERM SO AS TO FALL WITHIN THE SCOPE OF PROVISIONS O F S.40A(3). AT THE SAME TIME, WE MAY ALSO NOTE AT THIS JUNCTURE , THAT IN THE COURSE OF ITS BUSINESS ACTIVITY OF CONDUCTING R ACES, MUST HAVE INCURRED SEVERAL OTHER ITEMS OF EXPENDITURE DI STINCT FROM THE WINNING PAYMENTS TO PUNTERS, LIKE ON THE MAINTENANCE OF TURF, PAVILIONS, OTHER ASSETS, STAFF SALARIES, OFFICE EXPENSES AND SO ON. IT IS SUCH BUSINESS EXP ENSES WHICH ARE CAUGHT WITHIN THE WEB OF S.40A(3), IF PAY MENTS IN RESPECT OF SUCH EXPENSES ARE MADE IN CASH IN VIOLAT ION OF THE PROVISIONS OF S. 40A(3). IN ANY EVENT, SINCE T HE LOWER AUTHORITIES HAVE NOT EXAMINED THE NATURE OF THE PAY MENTS TO PUNTERS TO FIND OUT WHETHER SUCH EXPENDITURE FAL LS WITHIN THE SCOPE OF THE PROVISIONS OF S.40A (3), IN THE IN TEREST OF JUSTICE, WE DEEM IT FIT TO RESTORE THIS ASPECT TO T HE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE NATURE OF THE P AYMENTS TO THE PUNTERS, I.E. WHETHER SUCH PAYMENTS AMOUNT T O THE PARTICULAR TYPE EXPENDITURE WHICH ALONE ARE CAUGHT BY THE PROVISIONS OF S.40A(3). CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDERS OF THE REVENUE AUTHOR ITIES ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF TH E ASSESSING OFFICER TO EXAMINE THE NATURE OF THE PAYMENTS TO PU NTERS, SO AS TO ASCERTAIN WHETHER THEY AMOUNT TO THE PARTICUL AR TYPE OF BUSINESS EXPENDITURE WHICH ALONE FALLS WITHIN TH E SCOPE OF THE PROVISIONS OF S.40A(3), AND IF SO, EXCLUDE T HE SUCH OF THOSE PAYMENTS WHICH FALL WITHIN THE EXCEPTIONS PRE SCRIBED UNDER RULE 6DD(J) AS IT STANDS DURING THE RELEVANT TIME, I.E. ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 18 PAYMENTS MADE ON A DAY ON WHICH THE BANKS ARE CLOSE D EITHER ON ACCOUNT OF HOLIDAY OR STRIKE, FROM THE SC OPE OF DISALLOWANCE U/S 40A(3). HE MAY ACCORDINGLY RE-COM PUTE THE DISALLOWANCE UNDER S.40A(3), AFTER GIVING REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ASSESSEES GROUNDS ON THIS ISSUE ARE ALLOWED IN PART FOR STATISTICAL P URPOSES. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DIS MISSED. APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED FO R STATISTICAL PURPOSES. 15. THUS IT IS APPARENT THAT THE ASSESSEE IS REQUI RED TO SETTLE THE WINNING BETS IMMEDIATELY AND IF IT IS NOT SETTL ED IN CASH THE PUNTERS WILL NOT UTILIZE THE WINNING AMOUNTS TO BET IN THE SUBSEQUENT RACES. AS SUBMITTED BY THE ASSESSEE MOST OF THE RACES TAKE PLACE BEYOND THE BANKING HOURS AND ON HO LIDAYS AND SUNDAYS. SEC 40A(3) APPLIES TO ALL PAYMENTS EXCEPT PAYMENTS ARE REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE. IN T HE CASE OF THE ASSESSEE ON MOST OF THE DAYS THE RACES AND THE BETT INGS TAKE PLACE AFTER THE BANKING HOURS ARE OVER. THEREFORE T HE ISSUE IS WHETHER THE PAYMENTS MADE BEYOND THE BANKING HOURS ARE TO BE CONSIDERED AS EXCLUDED FROM THE PURVIEW OF SEC 40A( 3). 16. SEC 40A(3) READS AS UNDER: PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND N O PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER SUB SECTION (3) AND THIS SUB SECTION WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 19 RUPEES IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AN D EXTENT OF BANKING FACILITIES AVAILABLE CONSIDERATIO NS OF BUSINESS EXPENDITURE AND OTHER RELEVANT FACTORS. 17. THE EXCEPTIONS TO THE APPLICATION OF SEC 40A (3 ) IS LAID DOWN IN RULE 6DDJ. RULE 6DD AFTER ITS AMENDMENT FRO M 1995, READS AS UNDER: RULE 6DD PRIOR TO 25.7.1995, CLAUSE (J) OF RULE 6DD OF THE I T RULES READ AS FOLLOWS: 6DD....... I) IN ANY OTHER CAUSE, WHERE THE ASSESSEE SATISFIES THE ASSESSING OFFICER THAT THE PAYMENT COULD NOT BE MAD E BY A CROSS CHEQUE DRAW ON A BANK OR BY A DRAWN ON A BANK OR BY A CROSSED BANK DRAFT...... (1) DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCE S OR (2) BECAUSE PAYMENT IN THE MANNER AFORESAID WAS NO T PRACTICABLE, OR WOULD HAVE CAUSED GENUINE DIFFICULT Y TO THE PAYEE, HAVING REGARD TO THE NATURE OF THE TRANSACTION AND THE NECESSITY FOR EXPEDITIOUS SETTLEMENT THEREOF. AND ALSO FURNISHES EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER AS TO THE GENUINENESS OF THE PAYMENT AND IDENTITY OF THE PAYEE. THE ABOVE CLAUSE (J) OF RULE 6DD HAS BEEN OMITTED B Y THE IT (FOURTEENTH AMENDMENT) RULES 1995 W.E.F. ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 20 27.5.1995. IT IS PERTINENT TO REFER AT THIS JUNCTU RE, TO THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT I N THE CASE OF SMT. CH. MANGAYAMMA VS. UNION OF INDIA AND OTHERS (239 ITR 687), WHEREIN CONSIDERING THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF S.40A( 3) OF THE ACT IN THE LIGHT OF THE ABOVE AMENDMENT MADE TO RULE 6DD OF THE IT RULES, THE HONBLE HIGH COURT OBSERVED AND HELD AT PAGE 693 OF THE REPORTS (239 ITR) AS FOLLOWS: IN VIEW OF THE AFORESAID PRINCIPLES AS LAID DOWN A ND THE OBJECT AS SOUGHT TO BE ACHIEVED U/S 40A(3) OF T HE ACT, ANY CHANGES MADE IN THE SUBORDINATE LEGISLATIO N WOULD NOT IN ANY WAY AFFECT THE SUBSTANTIVE PROVISI ON. MOREOVER, BY DELETING THE CIRCUMSTANCES AS CONTEMPLATED EARLIER, VIZ., SUB CLAUSES (1) AND (2 ) OF RULE 6DD(J) THE OBJECTS OF CURBING THE CIRCULATION OF BLACK MONEY AND REGULATING THE BUSINESS TRANSACTION S BECOME MORE STRENGTHENED AND IT AVOIDS ANY UNDUE ADVANTAGE BEING TAKEN BY UNSCRUPULOUS ASSESSEES OR LITIGATION BEING MULTIPLIED. AS THE POSITION STAND S NOW 20% OF THE CASH TRANSACTIONS EXCEEDING RS.20,000 ARE DISALLOWED IN COMPUTING THE BUSINESS EXPENDITURE BUT NOT THE ENTIRE RS.20,000/- WHILE T HE AMENDED PROVISION CONFERS ADVANTAGE TO THE ASSESSEE TO THIS EXTENT, THE CIRCUMSTANCES PERMITTED TO BE TAKEN INTO ACCOUNT BY THE ASSESSING AUTHORITY ARE N O LONGER AVAILABLE BY REASON OF DELETION OF OLD RULE 6DD(J). BUT THAT BY ITSELF DOES NOT MAKE SECTION 4 0A(3) ARBITRARY AND UNCONSTITUTIONAL. ONE CANNOT PLEAD IGNORANCE OF LAW AND MAKE CASH PAYMENTS CONTRARY TO LAW. IT IS TOO LATE IN THE DAY TO ACCEPT ANY SU CH ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 21 PROPOSITION. FURTHERMORE, IN THE PRESENT DAY BANKI NG SCENARIO, THE MODE OF PAYMENT BY WAY OF CROSSED CHEQUES OR DEMAND DRAFTS CANNOT BE SAID TO BE ONEROUS DUTY CASE ON AN ASSESSEE WHICH CAN BE MADE A FOUNDATION FOR ATTACKING THE VALIDITY OF THE SAID SECTION. THEREFORE, IT IS NOT OPEN FOR ATTACKING T HE PROVISION AS VIOLATIVE OF ANY PROVISION OF THE CONSTITUTION. THERE IS NO ARBITRARINESS OR DISCRIMINATION IN THE SAID PROVISION WARRANTING INTERFERENCE BY THIS COURT UNDER THE CIRCUMSTANCES. IN VIEW OF THE ABOVE THERE IS ABSOLUTELY NO MERITS IN THE CHALLENGE MADE AS TO THE VALIDITY OF SECTION 40 A(3) OF THE ACT BY MERE DELETION OF SUB CLAUSES (1) AND (2) OF RULE 6DD(J). THE SAID PROVISION IS PERFECTLY VALID AND WE MAY HASTEN TO ADD THAT THE DELETION OF SUB CLAUS ES (1) AND (2) OF RULE 6DD(J) IS ONLY A STEP FORWARD I N THE ACHIEVEMENT OF THE AVOWED OBJECT ENVISAGED U/S 40A( 3) OF THE ACT. 18. THEREFORE THE ONLY EXCEPTION THAT THE ASSESSEE CAN CLAIM IS WHEN PAYMENTS ARE REQUIRED TO BE MADE ON DAYS WHEN THE BANKS WERE CLOSED ON ACCOUNT OF HOLIDAYS OR STRIKE. TRANSACTIONS AFTER THE BANKING HOURS IN THE COURSE OF REGULAR BU SINESS WILL NOT FALL WITHIN THIS EXCEPTION. IN THOSE TRANSACTIO NS, THE PAYMENT IS NOT REQUIRED TO BE MADE WHEN THE BANKS ARE CLOSE D I.E. AFTER BANKING HOURS. FURTHER THE PURPOSE OF THE DISALLOWA NCE U/S 40A (3) IS TO DISSUADE TRANSACTIONS BY CASH. HOWEVER, T HE ACTIVITY OF THE ASSESSEE IS A PECULIAR ONE IN WHICH THOUSANDS O F BETTERS PLACE THEIR BET AND ON COMPLETION OF THE RACE/S, TH EY ARE REQUIRED TO BE PAID THEIR WINNINGS ON PRESENTATION OF THEIR WINNING TICKET. THEREFORE THE ASSESSEE IS REQUIRED TO MAKE THEIR ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 22 PAYMENTS IMMEDIATELY AFTER THE RACE/S ARE COMPLETED AT THE VENUE. IT WILL BE IMPOSSIBLE FOR THEM TO WRITE OUT THE CHEQUES TO THE WINNERS AND GIVE IT TO THEM ON THE COMPLETION OF THE RACE. AND THE BETTERS WILL NOT ACCEPT CHEQUES AS THEY WIL L BE UTILIZING THE SAME FOR BETTING IN THE NEXT RACES. HAVING ACC EPTED HORSE RACING AS A GENUINE ACCEPTABLE LINE OF ACTIVITY, WE HAVE TO APPRECIATE THE DIFFICULTIES IN DISBURSING THE WINNI NGS AT THE VENUE OF THE RACE CLUB TO SO MANY WINNERS ALMOST INSTANTANEOUSLY. 19. SEC 40A(3) ITSELF PROVIDES THAT THE EXCEPTIONS WILL HAVE TO BE PRESCRIBED HAVING REGARD TO THE NATURE AND EXTEN T OF BANKING FACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EX PEDIENCY AND OTHER RELEVANT FACTORS. TAKING ALL THESE FACTORS, C ONSIDERING THE NATURE OF ACTIVITY OF THE ASSESSEE AND THE NECESSIT Y FOR THEM TO PAY CASH TO THE WINNERS IMMEDIATELY, WE ARE OF THE OPINION THAT THE CONDITION UNDER RULE 6DD FOR EXEMPTION VIZ., TR ANSACTIONS SHOULD HAVE TAKEN PLACE ON BANK HOLIDAYS SHOULD BE READ DOWN IN THE CASE OF THE ASSESSEE. IN THIS CASE IF THE TR ANSACTION TOOK PLACE BEYOND THE NORMAL BANKING HOURS ON WORKING DA YS AND TRANSACTION WHICH TOOK PLACE ON SUNDAYS AND HOLIDAY S, IT WOULD NOT ATTRACT THE PROVISIONS OF SEC 40A(3) AND NO DIS ALLOWANCE CAN BE MADE IN RESPECT OF PAYMENT MADE TO WINNING PUNTE RS BEYOND THE NORMAL BANKING HOURS OR ON BANK HOLIDAYS U/S 40 A(3). AS THERE WILL BE DIFFERENT BANKING HOURS FOR DIFFERENT BANKS AND BRANCHES, THE BANKING HOURS OF THE MAIN BRANCH OF S BI IN HYDERABAD SHALL BE TAKEN FOR THIS PURPOSE. THIS ISS UE IS REMITTED BACK TO THE FILES OF THE AO AND AO IS DIRECTED TO R E-COMPUTE THE DISALLOWANCE U/S 40A(3) AS PER THE ABOVE DISALLOWAN CE AND THE ASSESSEE SHALL FURNISH THE PARTICULARS ABOUT THE TI MINGS OF THE PAYMENT OF THE WINNINGS TO PUNTERS. ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 23 20. THE APPEAL OF THE ASSESSEE IN ITA NO 1425/H/11 FOR AY 2007-08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 21. ITA NO.1059/HYD/2011 ASSESSMENT YEAR 2006-07: 22. THE FIRST ISSUE IS WITH RESPECT TO AD HOC DISA LLOWANCE IN RESPECT OF WINNING PAYMENTS OF LESS THAN RS.2500/- WHICH HAS BEEN DECIDED IN ITA NO.1425/HYD/2011. 23. THE SECOND ISSUE DISALLOWANCE U/S 40A(3) HAS B EEN DECIDED IN ITA NO.1425/HYD/2011. 24. THE THIRD ISSUE IS WHETHER THE ASSESSMENT REOP ENED U/S 143(3) READ WITH 147 ON 31.12.2009 IS VALID IN LAW. IN OUR OPINION, THE REOPENING IS VALID IN LAW FOLLOWING TH E RATIO OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. RAJESH JHAVERI STOCK BROKERS P LTD. (291 ITR 500). HENCE WE CONFIRM THE ORDER OF THE CIT(A) ON THIS GROUND AND REJECT THIS GROUND OF APPEAL. THIS APPEAL IS PARTLY ALLOWED F OR STATISTICAL PURPOSES. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.1059/HYD/2011 FOR ASSESSMENT YEAR 2006-07 IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 26. ITA NOS. & 313 & 312 /H/2011 & ASSESSMENT YEA R 2004-05, 2005-06. THE ONLY ISSUE IS WITH RESPECT TO DISALLOWANCE U/ S 40A(3) OF THE INCOME TAX ACT, 1961 WHICH HAS BEEN DECIDED IN ITA.NO.1425/HYD/2011 FOR THE ASSESSMENT YEAR 2007-0 8 AT PARAS. 18 & 19. 26.1. IN THE RESULT, BOTH THESE APPEALS OF THE AS SESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 24 27. ITA NO 1569/H/11. AY 2007-08 DEPARTMENTAL APP EAL: THE FIRST GROUND OF APPEAL BY THE REVENUE IS AGAINS T THE ORDER OF THE CIT(A) RESTRICTING THE DISALLOWANCE IN RESPECT OF WINNING PAYMENTS, EACH LESS THAN RS. 2500/- ON THE GROUND THAT THE AO HAD FAILED TO PROVIDE THE FULL PARTICUL ARS. IN THE ASSESSEE'S APPEAL SUPRA, ON THE SAME ISSUE WE HAD D ELETED THE ENTIRE DISALLOWANCE MADE ON THIS ACCOUNT, FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ASSESSEE'S OWN CASE AYS 2004-05 AND 2005-06 IN ITA NO212,710/HYD/08 AND 972, 973/ HYD/0 8 DATED 26.09.08. IN THIS VIEW OF THE MATTER AS THE E NTIRE DISALLOWANCE HAS BEEN DELETED, THE DEPARTMENTAL APP EAL THAT THE DISALLOWANCE SHOULD BE AT 15% DOES NOT STAND AND TH E DEPARTMENTAL GROUND ON THIS ISSUE IS DISMISSED. 28. THE NEXT GROUND OF APPEAL BY THE REVENUE IS TH AT THE AMOUNT OF RS. 2,68,27,314/- PAID TO OTHER CLUBS SHO ULD BE DISALLOWED UNDER SEC 40(A)(IA) AS THEY CONSTITUTED COMMISSION AND NO TAX WAS DEDUCTED AT SOURCE U/S 194H. THE CIT (A) DELETED THE DISALLOWANCE OBSERVING AS UNDER: THUS IN VIEW OF SUCH ORDER PASSED BY THE CIT(A) II , HYDERABAD PERTAINING TO THE ABOVE ISSUE FOR ASSESSMENT YEAR 2007-08 IN THE CASE OF THE ASSESSEE , AND FOLLOWING ACCEPTANCE OF SUCH DECISION BY THE DEPARTMENT AND AFTER CONSIDERING SUCH SUBMISSIONS OF AR, THE SAID DISALLOWANCE OF RS.2,68,27,314/- MA DE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT I N THE ASSESSMENT IN THIS CASE IS NOT SUSTAINABLE. HENCE THE SAME IS DELETED. 29. AGGRIEVED THE REVENUE IS ON APPEAL. WE FIND TH AT THE TDS OFFICER BY ITS ORDER DATED 6.4.2009 HAS TREATED THE ASSESSEE AS ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 25 ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURC E AND RAISED THE DEMAND U/S 201(1) AND 201(1A). IT IS ALSO BEEN POINTED BY THE AO THAT AT PRESENT THE ASSESSEE ITSELF IS MAKIN G TDS ON SUCH PAYMENTS WHICH PROVES THAT THE STAND OF THE REVENUE IS CORRECT. THE ASSESSEE HAS TO ESTABLISH THAT IT IS NOT ACTING AS AGENT OF THE OTHER CLUBS AND THE AMOUNT PAID BY THE ASSESSEE TO OTHER RACE CLUBS IS ONLY SHARING OF THE PROFIT AND NOT IN THE NATURE OF COLLECTION. THE ASSESSEE HAS NOT BROUGHT IN DETAIL TO PROVE EVEN IN CASES OF RACES HELD IN OTHER CLUBS, AS FAR AS BE TTING IN HYDERABAD IS CONCERNED IT IS BETWEEN THE PUNTERS AN D THE ASSESSEE. IN THESE CIRCUMSTANCES, WE DEEM IT FIT T O RESTORE THE ISSUE TO THE FILE OF THE AO IN ORDER TO GIVE ANOTHE R OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AND ESTABLISH THAT THERE IS NO PRINCIPAL AGENT RELATION SHIP BETWEEN THE TWO CLUBS . THE AO SHALL AFTER EXAMINING THE DETAILS ADJUDICATE IN ACC ORDANCE WITH LAW. 30. IN THE RESULT, THE APPEAL BY THE REVENUE IN IT A NO 1569/H/2011 FOR ASSESSMENT YEAR 2007-08 IS PARTLY A LLOWED STATISTICAL PURPOSES. 31. ITA NO.894/HYD/2011 ASSESSM ENT YEAR 2006-07 32. THE ONLY ISSUE IS WITH RESPECT TO DISALLOWANCE OF PAYMENTS OF LESS THAN RS.2500/- WHICH HAS BEEN DECIDED IN AS SESSEES APPEAL IN ITA NO.1425/HYD/2011 AT PARA 8. WHICH IS AS FOLLOWS: 8. WE FIND THAT THE EARLIER ORDER OF THE ITAT HAVE ELABORATELY DEALT WITH THE ISSUE. THE DEPARTMENT HA S NOT BROUGHT ANYTHING TO SHOW THAT THE FACTS OF THE CASE ARE ANY DIFFERENT FROM THAT FOR THE AY 2004-05 AND 2005-06 COVERED BY THE ITAT ORDER. THE ACTIVITY OF THE ASSESSEE IS SUCH THAT THEY HAVE TO DEAL DAILY WITH NUMEROUS INDIVIDUALS I N A ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 26 SHORT SPAN OF TIME WHEN THE BETTINGS ARE ON. THEY A CCEPT BETS AND SETTLE THE WINNING AMOUNTS TO THE WINNING PUNTERS. IT WILL BE DIFFICULT TO MAINTAIN COMPLETE DETAILS ABOUT ALL THE PERSONS. THE ENTIRE PAYMENT WAS THROU GH COMPUTERIZED SYSTEM. THE PAYMENT WAS MADE TO THE PE RSON HOLDING THE WINNING TICKET. THE DEPARTMENT HAS NOT BROUGHT TO OUR NOTICE OF ANY INSTANCE OF PAYMENT WHEN THERE WAS NO WINNING TICKET. IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE ASSESSE E'S OWN CASE WE DELETE THE AD HOC DISALLOWANCE OF 10% OF T HE TOTAL PAYMENT FOR WINNING BETS OF LESS THAN 2500/- EACH. THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS ALLOWED. THEREFORE, THE REVENUE APPEAL IN ITA NO.894/HYD/201 1 IS DISMISSED. 33. ITA NO.1946/HYD/2011 ASSESSMENT YEAR 2005-06: 34. AGGRIEVED THE REVENUE IS ON APPEAL. WE FIND TH AT THE TDS OFFICER BY ITS ORDER DATED 6.4.2009 HAS TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE AND RAISED THE DEMAND U/S 201(1) AND 201(1A). IT IS ALSO BEEN POINTED BY THE AO THAT AT PRESENT THE ASSESSEE ITSELF IS MAKIN G TDS ON SUCH PAYMENTS WHICH PROVES THAT THE STAND OF THE REVENUE IS CORRECT. THE ASSESSEE HAS TO ESTABLISH THAT IT IS NOT ACTING AS AGENT OF THE OTHER CLUBS AND THE AMOUNT PAID BY THE ASSESSEE TO OTHER RACE CLUBS IS ONLY SHARING OF THE PROFIT AND NOT IN THE NATURE OF COLLECTION. THE ASSESSEE HAS NOT BROUGHT IN DETAIL TO PROVE EVEN IN CASES OF RACES HELD IN OTHER CLUBS, AS FAR AS BE TTING IN HYDERABAD IS CONCERNED, IT IS BETWEEN THE PUNTERS AND THE ASSESSEE. IN THESE CIRCUMSTANCES, WE DEEM IT FIT T O RESTORE THE ISSUE TO THE FILE OF THE AO IN ORDER TO GIVE ANOTHE R OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AND ESTABLISH THAT THERE IS NO ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 27 PRINCIPAL AGENT RELATIONSHIP BETWEEN THE TWO CLUBS. THE AO SHALL AFTER EXAMINING THE DETAILS ADJUDICATE IN ACC ORDANCE WITH LAW. THEREFORE, REVENUES APPEAL IN ITA NO. 1946/HYD/201 1 IS ALLOWED FOR STATISTICAL PURPOSES. 35. IN THE RESULT, ASSESSEES APPEALS : 1. ITA NO.313/H/2011 ALLOWED FOR STATISTIC AL PURPOSES. 2. ITA.312/HYD/2011 ALLOWED FOR STATISTICAL PURPO SES. 3. ITA NO.1059/HYD/2011 IS PARTLY ALLOWED FOR STATI STICAL PURPOSES. 4. ITA. NO. 1425/HYD/2011 IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES. 36. IN THE RESULT, REVENUE APPEALS: 1. ITA NO.894/HYD/2011 IS DISMISSED. 2. ITA NO.1569/HYD/2011 IS PARTLY ALLOWED FOR STATI STICAL PURPOSES. 3. ITA NO.1946/H/2011 IS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE COURT ON : 7.3.2012 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 7 TH MARCH, 2012 ITA NOS.1425, 312, 313/H/2011 ITA NOS.894/H/2011 & 1059/H/2011 HYDERABAD RACE CLUB, HYDERABAD 28 COPY FORWARDED TO: 1. M/S HYDERABAD RACE CLUB, MALAKPET, HYDERABAD 2. THE DCIT, CIRCLE 2(2), HYDERABAD 3. THE ACIT, CIRCLE 2(2), HYDERABAD 4. THE CIT(A)-III, HYDERABAD 5. THE CIT, HYDERABAD 6. THE DR, ITAT, HYDERABAD NP/