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2012 (6) TMI 535 - AT - Income TaxWhether Commissioner of Income-tax (Appeals) has erred in confirming the action of Assessing Officer in making disallowance of expenditure of Rs. 71,00,339/- u/s. 40(a)(ia) of the I.T. Act – Held that:- peculiarity of this case is that the sub-contract which was assigned to this assessee was not further sub-contracted to the lorry owners. In a sub-contract, a prudent contractor generally include the clauses of liability which were undertaken by him while accepting the execution of the work from the main contractor. condition of passing of the liability cannot exhaustive and cannot be said to be the only criteria to decide whether there was an existence of contract or sub-contract. The catalog of criterion must include certain other clauses as well, yet in this case this criteria can be determinative considering the nature of work assigned by the assessee to transporters. in the absence of transfer or pass-over of any contractual responsibility to transporters as a sub-contractor, the assessee being an individual was not responsible for the deduction of tax at source as prescribed u/s. 194C(2) of the IT Act. Consequence thereupon the provisions of section 40(a)(ia) of the Act were incorrectly invoked, hence the view taken by the authorities below are hereby reversed. Ground is allowed Whether Commissioner of Income-tax (Appeals) has erred in confirming the action of Assessing Officer in making disallowance of Rs. 45,275/- being 20% of telephone expenses and 10% of other expenses - under the head "miscellaneous expenses", staff welfare expenses, telephone expenses, travelling expenses, etc. a total sum of Rs. 3,87,801/- was debited out of which the AO has made disallowance at 20% amounting to Rs. 77,560 - Held that:- When it was contested before the ld. CIT(A), the disallowance in respect of telephone expenses @ 20% was upheld. However, the disallowance in respect of other heads it was restricted to 10%. On hearing the submissions of both the sides and considering the nature of business as also the size of the business, we hereby hold that only 5% disallowance should suffice to cover up the expenditure alleged to be made towards personal use by the assessee. appeal of the assessee is partly allowed
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