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2014 (5) TMI 919 - AT - Income TaxDisallowance of labour and cash expenses Held that:- The books of the assessee are audited and no adverse remark has been made by the Chartered Accountant with respect to the accounts - CIT (A) was of the view that the assessee was not asked to correlate the rendering of service and expenses by the AO, the assessee had provided detailed evidences of the expenses incurred for labour - The allegation of the AO that the attendance registers have been written in one instance and the thumb impressions seems to be of a single person is not borne out by evidences produced before CIT (A) - CIT (A) has also upheld the disallowance only for the reason that some of the expenses have been incurred in cash and therefore there is likelihood of some portion is not justified - CIT(A) has also not pointed out any specific instance of cash expenditure which is an unjustified expense - the disallowance of Rs.4 lac of the labour expenses is uncalled for Decided against Revenue. Disallowance of travelling and office expenses Held that:- In the absence of complete details AO disallowed 20% of expenses which was scaled-down to Rs.25,000 - the assessee maintains several vehicles such as JCB Machines, Jeep, tractor-trailer for the purpose of business and it has office at Surat and Baroda and has business transactions with Companies stationed outside Surat, the CIT (A) was justified in restricting the disallowance to Rs.25,000 thus, there was no reason to interfere in the order of CIT (A) thus, the order of the CIT(A) is upheld Decided against Revenue. Accrual of interest on Bank FD Held that:- The method of accounting followed by the assessee is stated to be mercantile - There is no mention of different method of accounting being employed for accounting of interest income- CIT(A) was of the view that the Fixed deposits on which the assessee has earned interest are business assets and the income earned therefrom is business income - the assessee has claimed the credit of TDS on the interest income but has not offered the interest income to tax - CIT (A) was right in confirming the action of AO there was no reason to interference in the order of the CIT(A) Decided against revenue.
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