TaxTMI 
TaxTMI 
2021 (4) TMI 172
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....g addition that in respect of those issues which are not doubted by the Assessing Officer during the course; 2. On the facts and in the circumstances of the case, the ld. CIT(A) ha erred in invoking the provisions of section 40A(3) for the first time in appellate proceedings; 3. The addition made by the ld. CIT(A) suo moto u/s. 40A(3) of the Act is bad in law and is based on conjectures and surmises. 4. The ld. CIT(A) has erred on facts in sustaining the addition made by the Assessing Officer on account of household expenses." 3. Briefly stated, the facts of the case are that the appellant is running a trading business of live stock i.e. manufacturing raw buffalo meat on whole sale basis. The assessee also manu....
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....l be deemed to be the profits and gains of the business or profession under sub-section (3A) of section 40A of the Act where the payment or aggregate of the 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 Rs. 20,000/- in the cases and circumstances specified hereunder, namely: Where the payment is made for the purchase of- (i) agricultural or forest produce; or (ii) the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or (iii) fish or fish products; or (iv) the products of horticulture or agriculture, to the cultivator, grower or producer of such articles, produc....
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....ar No. 8/2006 dated 06-10-2006 although he is admittedly a trader. Similar is the case of other firms whose turnover is running in crores. The benefit of exception to Rule 6DD(e)(ii) is not extended to the traders. Had that been the spirit of the statute, entire trading in animal husbandry products should have been kept outside the purview of section of section 40A(3) of the Act. However, it is not so and benefit of exemption is available to the producers only and not to the traders. Thus purchases made from these 10 firms is not covered by exception of Rule 6DD as well as Circular No. 8/2006 dated 06-10-2006." 11. The ld. CIT(A) finally concluded as under: "The facts of the case, submissions made by the appellant remand report ....
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....nce addition on account of cash purchases at Rs. 24,92,41,331/- have already been made u/s. 40A(3) of the Act, therefore the addition made by the AO at Rs. 33,70,945/- is held as merged with the addition made u/s. 40A(3) of the Act and no separate addition on this count is called for. Addition of Rs. 33,70,945/- is accordingly directed to be deleted. Ground of appeal No. 3 is allowed." 12. Before us, the ld. counsel for the assessee drew our attention to the CBDT Circular No. 8 of 2006 dated 06.10.2006 and pointed out that the lower authorities have wrongly interpreted the mandatory clauses of this Circular. It is the say of the ld. counsel for the assessee that if this Circular is interpreted in true perspective, additions made u/s. 40A....
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....ddleman by whatever name called. 2. Representations have been received from certain quarters seeking further clarification as to who are the producers of livestock and meat and the evidence required to be furnished in this regard by the persons making the payments. 3. The Board after examination of the issue is of the view that any person, by whatever name called, who buys animals from the farmers, slaughters them and then sells the raw meat carcasses to the meat processing factories or to the traders/retail outlets would be considered as producer of livestock and meat. 4. The benefit of rule 6DD of the Income-tax Rules, 1952 (sic 1962) shall be available to the person referred to at para 3 above subject to furnis....