Circular No. 10/2008

Clarification Regarding the Meaning of the Expression 'Fish or Fish Products' Used in Sub-clause (iii ) of Clause (f) of rule 6DD of the Income-tax Rules, 1962

What this is

Circular No. 10/2008 was issued by the Central Board of Direct Taxes on 5 December 2008. Its subject is Clarification Regarding the Meaning of the Expression 'Fish or Fish Products' Used in Sub-clause (iii ) of Clause (f) of rule 6DD of the Income-tax Rules, 1962.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Widens two expressions in the rule 6DD exception that saves cash payments for fish from disallowance under section 40A(3). 'Fish or fish products' in rule 6DD(e)(iii) is read to include other marine products such as shrimp, prawn, cuttlefish, squid, crab and lobster. 'Producers' is read to include, besides fishermen, a headman of fishermen who sorts the catch brought in from the sea at the sea shore itself and then sells to traders and exporters. The circular then shuts the door at the other end: the exception is not available on a purchase from a person not proved to be a producer, who is only a trader, broker or other middleman by whatever name called. It notes that the clause is rule 6DD(e)(iii) after the Income-tax (Eighth Amendment) Rules, 2007, having been clause (f) before that, with effect from assessment year 2008-09.

Why it was issued

Representations were received from various quarters that seafood exporters were facing problems on account of section 40A(3).

Who it reaches

Seafood exporters and processors buying from fishermen
Headmen of fishermen who sort and sell the catch at the shore
Traders and brokers in marine products, who are outside the exception
Assessing Officers disallowing cash purchases under section 40A(3)

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.40A	s.29, s.36

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

CLARIFICATION REGARDING THE MEANING OF THE EXPRESSION 'FISH OR FISH PRODUCTS' USED IN SUB-CLAUSE (iii ) OF CLAUSE (f) OF RULE 6DD OF THE INCOME-TAX RULES, 1962
CIRCULAR NO. 10/2008, DATED 05-12-2008
Representations have been received from various quarters regarding problems being faced by the seafood exporters mainly on account of provisions of Section 40A (3) of the Income-tax Act, 1961.
2. Disallowance of expenditure under the provisions of sub-section (3) of Section 40A of the I.T. Act, 1961 is made in the computation of income in a case where a payment or aggregate of payments exceeding twenty thousand rupees is made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an account payee bank draft. However, payment otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft exceeding twenty thousand rupees does not attract the aforesaid disallowance in certain circumstances as prescribed under rule 6DD of the Income-tax Rules, 1962. Such exceptions, inter-alia, refer to payment made to the producer for the purchase of ‘fish or fish products' under sub-clause (iii) of clause (e) of rule 6DD. [Clause (f) of rule 6DD prior to coming into effect of the I.T. (Eighth Amendment) Rules, 2007 w.e.f. A.Y. 2008-09].
3. The following clarifications are, therefore, being issued for proper implementation of rule 6DD of the Income-tax Rules, 1962:—
(i) The expression ‘fish or fish products' used in rule 6DD( e)(iii) would include 'other marine products such as shrimp, prawn, cuttlefish, squid, crab, lobster etc.'.
(ii) The 'producers' of ‘fish or fish products' for the purpose of rule 6DD(e) of I.T. Rules, 1962 would include, besides the fishermen, any headman of fishermen, who sorts the catch of fish brought by fishermen from the sea, at the sea shore itself and then sells the fish or fish products to traders, exporters etc.
4. It is further clarified that the above exception will not be available on the payment for the purchase of fish or fish products from a person who is not proved to be a 'producer' of these goods and is only a trader, broker or any other middleman, by whatever name called.

[F. No. 225/48/2008-ITA-II]

What to watch

The burden runs against the buyer: unless the seller is proved to be a producer, the exception fails and the cash payment is disallowed.
The extension to a headman is tied to the facts described - sorting the catch at the sea shore and then selling; a purchasing agent is not covered.
The clause moved from rule 6DD(f) to rule 6DD(e) with effect from assessment year 2008-09, so the older references point to the same exception under a different letter.
The threshold recited is a payment or aggregate of payments exceeding twenty thousand rupees to a person in a day, otherwise than by account payee cheque or draft, as section 40A(3) then stood.

Where you meet it

In a scrutiny assessment of a seafood exporter where cash purchases are proposed to be disallowed under section 40A(3).

What it names

Rules it names. Rule 6DD of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

It mentions. Circular No. 10/2008

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 27/2017 — Clarification on cash sale of agricultural produce by cultivators/agriculturists 3 November 2017
Notification No. 98 — Income-tax (Eighth Amendment) Rules, 2008 - Insertion of rule 18DDA and Form No. 10CCBD 22 October 2008
Circular No. 3/2008 — Explanatory Notes to the Provisions of the Finance Act, 2007 12 March 2008
Circular No. 8/2006 — 8/2006 dated 06 10 2006 6 October 2006
Circular No. 4/2006 — Clarification Regarding the Meaning of the Expression "The Produce of Animal Husbandry’ Used in Sub-clause (ii) of Claus 29 March 2006
Notification No. 58 — Amendment of the Income-tax Rules under section 40A of the Income-tax Act, 1961 17 February 2005

← Circular No. 11/2008 · Circular No. 9/2008 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.