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2014 (1) TMI 347 - ITAT HYDERABADDisallowance of labour charges – Held that:- Held that:- The assessee’s turnover is more than statutory limit which necessitates its accounts to be statutorily audited - The assessee has filed the audited accounts before the Assessing Officer and explained that due to shifting of his office and residence it is not possible for the assessee to produce all the material in support of its claim of expenditure - The Assessing Officer has not doubted the authenticity of the accounts maintained by the assessee - when an assessee makes a claim, it is for the assessee to substantiate the claim with necessary evidence to the satisfaction of the Assessing Officer - the assessee has not been able to substantiate its claim in its entirety along with necessary evidence before the Assessing Officer or before the CIT(A) - the activity involves engagement of large number of both skilled and unskilled labour and that the assessee may not be able to get independent evidence/vouchers in respect of engagement of unskilled labour – Thus, the disallowance of labour charges restricted to 10% of the total labour expenses claimed by the assessee. Disallowance of cost of materials – Disallowance u/s 40(a)(ia) of the Act - Held that:- There may be certain miscellaneous items, for which the assessee may not be able to obtain the bills or vouchers while it also cannot be ruled out that the assessee might have inflated the expenses - some disallowance is justified but disallowance of 50% of the expenses is excessive – thus, the disallowance restricted to 15% of the unsubstantiated cost of materials. Verification of claim - Machinery and vehicles hire charges – Held that:- The CIT(A) has no power to remand the issue to the Assessing Officer for verification – thus, the matter remitted to the AO for fresh adjudication – Decided partly in favour of Assessee.
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