diff --git a/erpnext/subcontracting/doctype/subcontracting_receipt/subcontracting_receipt.py b/erpnext/subcontracting/doctype/subcontracting_receipt/subcontracting_receipt.py
index 24d4381466411ce5ae9aa7c81623042aea8eb32f..5a8a919453f3f1160f9e077235e137ffac04d7ee 100644
--- a/erpnext/subcontracting/doctype/subcontracting_receipt/subcontracting_receipt.py
+++ b/erpnext/subcontracting/doctype/subcontracting_receipt/subcontracting_receipt.py
@@ -442,6 +442,12 @@ class SubcontractingReceipt(SubcontractingController):
 				)
 
 	def validate_available_qty_for_consumption(self):
+		if (
+			frappe.db.get_single_value("Buying Settings", "backflush_raw_materials_of_subcontract_based_on")
+			== "BOM"
+		):
+			return
+
 		for item in self.get("supplied_items"):
 			precision = item.precision("consumed_qty")
 			if (
diff --git a/erpnext/subcontracting/doctype/subcontracting_receipt/test_subcontracting_receipt.py b/erpnext/subcontracting/doctype/subcontracting_receipt/test_subcontracting_receipt.py
index 037de3e2aea9d84825d58337c5e246db14b19eac..bf586a02f7bf1d622e0947308eb5605d1b13b2a7 100644
--- a/erpnext/subcontracting/doctype/subcontracting_receipt/test_subcontracting_receipt.py
+++ b/erpnext/subcontracting/doctype/subcontracting_receipt/test_subcontracting_receipt.py
@@ -82,9 +82,8 @@ class TestSubcontractingReceipt(FrappeTestCase):
 		self.assertEqual(scr.get("items")[0].rm_supp_cost, flt(rm_supp_cost))
 
 	def test_available_qty_for_consumption(self):
-		make_stock_entry(
-			item_code="_Test Item", qty=100, target="_Test Warehouse 1 - _TC", basic_rate=100
-		)
+		set_backflush_based_on("BOM")
+		make_stock_entry(item_code="_Test Item", qty=100, target="_Test Warehouse 1 - _TC", basic_rate=100)
 		make_stock_entry(
 			item_code="_Test Item Home Desktop 100",
 			qty=100,
@@ -128,7 +127,7 @@ class TestSubcontractingReceipt(FrappeTestCase):
 		)
 		scr = make_subcontracting_receipt(sco.name)
 		scr.save()
-		self.assertRaises(frappe.ValidationError, scr.submit)
+		scr.submit()
 
 	def test_subcontracting_gle_fg_item_rate_zero(self):
 		from erpnext.stock.doctype.purchase_receipt.test_purchase_receipt import get_gl_entries
@@ -488,6 +487,21 @@ class TestSubcontractingReceipt(FrappeTestCase):
 		# consumed_qty should be (accepted_qty * qty_consumed_per_unit) = (6 * 1) = 6
 		self.assertEqual(scr.supplied_items[0].consumed_qty, 6)
 
+		# Do not transfer materials to the supplier warehouse and check whether system allows to consumed directly from the supplier's warehouse
+		sco = get_subcontracting_order(service_items=service_items)
+
+		# Transfer RM's
+		rm_items = get_rm_items(sco.supplied_items)
+		itemwise_details = make_stock_in_entry(rm_items=rm_items, warehouse="_Test Warehouse 1 - _TC")
+
+		# Create Subcontracting Receipt
+		scr = make_subcontracting_receipt(sco.name)
+		scr.submit()
+		self.assertEqual(scr.docstatus, 1)
+
+		for item in scr.supplied_items:
+			self.assertFalse(item.available_qty_for_consumption)
+
 	def test_supplied_items_cost_after_reposting(self):
 		# Set Backflush Based On as "BOM"
 		set_backflush_based_on("BOM")