Allowing the appeal of the assessee the Court the Assessing Officer has  nowhere disputed the stand of the assessee supported by books of account that the supervisors are employees of the assessee. Tribunal recorded a finding based on surmise and presumption that the supervisors are nothing but sub-contractors of the assessee. Assessee withdrew amount from his bank account through his employees i.e., supervisors for disbursement to individual labourers and the supervisors gave an account of the money so received for payment to labourers. Thus, the assessee is principal and supervisors acted as agent of assessee.  Payment  made by the supervisors had not exceeded Rs. 20,000 to any individual labour. In view of the circumstances prescribed in the second proviso to S. 40A(3) r/w r. 6DD(l), disallowance was not sustainable.  (AY. 2006-07)