2016 (1) TMI 862 - AT - Income Tax

Tribunal upholds deletion of disallowance under Income Tax Act for cash payments by broiler chicken dealer

The Tribunal upheld the Commissioner of Income-tax (Appeals)-IV's decision to delete the disallowance u/s 40A(3) of the Act Read with Rule 6DD for the ... Disallowance u/s 40A(3) read with Rule 6DD - CIT(A) deleted the disallowance - Held that:- The assessee is in poultry business and purchasing birds at certain intervals with cash payments and has produced the ledger copy of M/s. Suguna Foods Ltd which is not disputed by Assessing Officer and relied on interpretation of clause (e) of Rule 6DD and explained that purchase of chicken birds falls within definition of livestock. Considering the above provisions of law, facts and circumstances of the case , the ld. CIT(A) has examined evidence available on record vis-a-vis explanations made by the assessee and there being no infirmity in the order of the ld.CIT(A), we are inclined to uphold the same by dismissing the ground raised by the Department. - Decided in favour of assessee. Disallowance of diesel and driver batta expenditure - CIT(A) deleted the disallowance - Held that:- We are of the considered opinion that the expenditure claimed by the assessee are reasonable and incidental to business and the ld.CIT(A) has rightly analyzed the nature of expenses and therefore, we are inclined to uphold the order of the ld.CIT(A) and dismiss the grounds of the Revenue.- Decided in favour of assessee. Issues:1. Deletion of disallowance u/s 40A(3) of the Act Read with Rule 6DD.2. Deletion of disallowance of diesel expense and driver batta.Deletion of disallowance u/s 40A(3) of the Act Read with Rule 6DD:The appeal by the Revenue challenged the order of the Commissioner of Income-tax (Appeals)-IV regarding the deletion of disallowance u/s 40A(3) of the Act Read with Rule 6DD for assessment year 2010-11. The case involved the assessee, a dealer in broiler chickens, whose purchases were scrutinized under CASS. The Assessing Officer added cash payments made to a supplier for purchases to the returned income. The ld. CIT(A) directed the Assessing Officer to delete the addition, citing that the payments were for the purchase of animal husbandry products, falling within Rule 6DD exceptions. The Tribunal upheld the order of the ld.CIT(A) based on Rule 6DD provisions and the nature of the assessee's business, dismissing the Revenue's appeal.Deletion of disallowance of diesel expense and driver batta:The Revenue's appeal also contested the deletion of disallowance of diesel expense and driver batta. The Assessing Officer estimated disallowance of a percentage of total expenses claimed by the assessee. However, the ld.CIT(A) directed the Assessing Officer to delete the addition, emphasizing the lack of comparative analysis or specific reasons for disallowance. The Tribunal upheld the ld.CIT(A)'s decision, stating that the expenses claimed were reasonable and essential to the business, dismissing the Revenue's grounds. The appeal of the Revenue in this matter was ultimately dismissed by the Tribunal on 6th November 2015 in Chennai.