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2014 (4) TMI 970 - HC - Income TaxPayments made to sub-contractors – Held that:- All the payments are by account payee cheques and the work, which the respondent-assessee is doing, certainly required sub-contractor ship to look into various other jobs which possibly the respondent-assessee was unable to handle on its own - as observed by the CIT(A) as well as the ITAT that income from DPR work had increased by 21.35% over preceding year whereas the corresponding expenditure is only 17.19% - while the payment to the three subcontractors whereas the AO disallowed 5% out of the total job work charges paid and this exercise of the AO appears without any justification and was not proper - the AO assessing the assessee ought to have forwarded such information to the AO, assessing those recipients and action, if deemed proper, could have been taken in their respective hands rather than observing here in the case of the assessee that the sub-contractors have not shown proper income or the income is disproportionate to the receipts - the conclusion of the AO to disallow the ad-hoc amount was not correct and rightly accepted by both the appellate authorities. Disallowance out of soil testing and surveying expenses – Held that:- Both the ITAT as well as CIT(A) have correctly disallowed the deletion and there was no occasion for any ad-hoc disallowance out of the expenses at the rate of 10% - it has been observed by the CIT (A) and approved by the ITAT that the receipts by the assessee were to the extent of ₹ 85,75,162/- as against the expenditure of ₹ 50,18,663 - even the receipts are substantially higher than the expenditure the disallowance deleted by the CIT(A) and approved by the ITAT cannot be faulted with. Salary/remuneration to the Chairman-cum-Managing Director – Held that:- The CIT(A) rightly deleted the disallowance which was upheld by the ITAT – there was no reason in interfering - on the face of overwhelming evidence on record, salary of ₹ 24 lac cannot be said to be excessive or unreasonable and the revenue has not been able to make out as to whether the salary paid to Shri Viswas Jain was not as per the fair market value as provided u/s 40A(2)(a) and 40A(2)(b) of the IT Act - The ITAT after appreciation of evidence, has come to the conclusion that the disallowance out of job work charges, soil testing and surveying charges and directors' remuneration is not proper and it had been rightly deleted by the CIT(A) and there was no infirmity in the order of the ITAT – Decided against Revenue.
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