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2014 (7) TMI 112 - HC - VAT and Sales TaxValuation - works contract - Disallowance of deduction of gross profit at 27.44% on labour charges - Availment of deduction of 30% towards labour charges under Rule 6(4)(n)(v) of the table of KST Rules - Held that:- profit earned by the Contractor to the extent it is relatable to supply of labour and service as a permissible deduction for the purpose of arriving at the taxable turnover of the works contractor - further that profit attributable to labour and like charges are separate permissible deductions. Appellant had executed various works contracts during the relevant assessment years. The assessee was not in a position to show the actual amount that he had incurred towards the labour and like charges and therefore, he has adopted standard rate of deduction provided under Rule 6(4)(n)(v) and claimed deduction of 30% on its contract receipt towards the labour and like charges. As per Explanation -II, the appellant had apportioned the gross profit earned by it between the value of goods transferred and labour and like charges. The Assessing Authority after considering the relevant provision of the law allowed the deductions. However, the Revisional Authority without critically examining the matter held that when the assessee availed the deduction of 30% towards labour charges under Rule 6(4)(n)(v) they are not entitled for deduction of 27.44% of gross profit on labour charges. Hence, the order passed by the Revisional Authority insofar as denial of the appellant's claim of deduction of gross profits attributable to labour and like charges under Rule 6(4)(n) of the KST Rules read with Explanation-II appended thereto is not sustainable in law - Decided in favour of assessee.
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