COMMISSIONER OF INCOME TAX Vs. KALYAN PRASAD GUPTA

JUDGEMENT

(1.) Heard on question of admission.

(2.) In the appeal preferred by the Revenue the question raised is whether the Tribunal was justified in law in confirming the order of CIT(A) deleting the additions made by the AO under Section 40A(3) of the IT Act.

(3.) It is not in dispute that the Assessee was a contractor and collecting the royalty and payment had been made to the contractor who had collected the royalty on behalf of the State. The AO disallowed 20 per cent of the amount as the payment exceeded Rs. 20,000; payment to the extent of Rs. 61,77,445 was made in cash. Explanation of the Assessee in this regard was that during the year the Assessee had paid Rs. 64,00,384 as royalty to the State Government and as per policy of the State Government, royalty is collected by the contractor on behalf of the Government and payment to the Government falls under Rule 6DD(b) and therefore, no disallowance of Rs. 12,35,490 could have been made by the AO under Section 40A(3) of the IT Act.