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2012 (11) TMI 792 - AT - Income TaxDisallowance made from the expense claimed under the head Salary and Bonus – Held that:- Payments in cash were made to only casual and temporary workers. Hence on a conspectus of the matter, the Ld CIT (A) restricted the impugned addition to a lump sum figure of Rs.5.00 lakhs for the reason that there is a probability that a part of claim cannot be substantiated by the assessee - AO has doubted the genuineness of this expense for another reason, i.e., the assessee could produce 5 employees out of 10 persons called for by him - disallowance upheld Determination of GP Rate - held that:- There cannot be any dispute that the assessee cannot realize any profit when a particular item is replaced at free of cost during the warranty period. If such warranty claims are borne by the assessee, then it will certainly have impact on the rate of GP. - the non-maintenance of stock leads to certain other problems, like theft and pilferage and such incidents would also have impact on the rate of GP. - The AO has not factored in such kind of possibilities while working out the average rate of GP. Further the samples taken by the AO cannot be taken as representative samples, as he has not taken samples randomly over the entire year. - Thus, in our view, the rate of GP worked out by the AO also cannot be considered to be a perfect one. - the average rate of GP on sale of spare parts may be fixed at 9% and in our view the same would meet the ends of justice. Disallowance made from the expense claimed under the head Telephone expenses – assessee had disallowed 1/20th of the expenses claimed under this head towards personal use. The AO however enhanced the disallowance to 1/4th of the total claim – Held that:- Assessee himself had disallowed a part of telephone expenses towards personal use on ad-hoc basis. The said action of the assessee establishes the fact that the telephones were put to personal use also - 1/5th of the expenses claimed disallowed Disallowance made from the expense claimed under the head “Vehicle expenses” and also from depreciation claimed on Motor car towards personal use – Held that:- Assessee himself had disallowed a part of telephone expenses towards personal use on ad-hoc basis. The said action of the assessee establishes the fact that the telephones were put to personal use also - 1/5th of the expenses claimed disallowed Disallowance made from Discount and Rebate claim – alleged that the assessee has inflated the claim made under the head “Discount and Rebate” and accordingly disallowed 20% there of – Held that:- AO has failed to adduce the opportunity of cross examining the persons who have given contradictory statements - no merit in the impugned disallowance and accordingly deleted Disallowance made from the “Labour charges” claim - AO issued letters u/s 133(6) of the Act to four persons to whom an aggregate amount of Rs.10,66,468/- had been paid as labour charges. Since the said letters were returned back un-served, the AO disallowed the said claim – Held that:- Assessee is required to engage out side persons also, to carry out the repair works of vehicles - assessee had deducted tax at source u/s 194C of the Act on the above said payments - assessee had made majority portion of the impugned amount by way of Account Payee cheques. It was also noticed that out of four persons, one had expired, one of them had gone abroad and other two persons were not immediately traceable - AO was not justified in making the addition – addition deleted Disallowance of Employees’ share of PF – Held that:- Assessee submitted that a grace period of five more days are available under the PF Regulations and the impugned payments have been made within the grace period. It was also submitted that the payments made within the grace period are also considered as payments made within the due date - amounts paid beyond the grace period disallowed
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