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2015 (10) TMI 1274 - AT - Income TaxAd-hoc disallowance @20% on Labour, Lodging & Site Expenses - Held that:- Although vouchers and details have been provided by the assessee but some of these details and evidences are not found to be fully authentic and there was no support of third party evidences in some of the cases. This fact has not been denied by Ld. Counsel that expenses were incurred in cash. Keeping in view, totality of the facts of the case, we feel that ends of justice will be met if the disallowance is reduced to 10%. - Decided partly in favour of assessee. Disallowance of Interest paid on account of delayed Service Tax and M Vat paid - compensatory nature OR penal nature? - Held that:- There are provisions for late payment in the respective legislations pertaining to service tax and M-vat, allowing the taxpayers for delayed payment of the dues if interest is paid. Thus, the interest is paid by the taxpayers within framework of provisions of law. These payments cannot said to be arising out infringement of law. These payments cannot said to be incurred by the assessee for any purpose which is offence or which is prohibited by law. Under these circumstances this expenditure can be said to be compensatory in nature. We can also take support from various judgments available on this issue. Hon’ble Supreme Court in the case of Mahalakshmi Sugar Mills Co. vs. CIT (1980 (4) TMI 1 - SUPREME Court) has held that interest for delayed payment of statutory dues is an allowable deduction u/s.37(1) of the Act. - Decided in favour of assessee Disallowance made on account of labour charges - CIT(A) deleted the addition - Held that:- CIT(A), himself examined this register in the appellate proceedings and found that Provident Fund, ESI, Professional Tax etc. were deducted from the salaries of the workers and this register gave complete information. It was further found by Ld. CIT(A) that the salary paid to each worker was not more than ₹ 10,000/- and that’s why most of the salaried workers were having income below taxable limit. It was further found by Ld. CIT(A) that salary register contained signatures of all the labourers and it was very much before the AO when he had impounded one of the registers. It was finally concluded by the Ld. CIT(A) that nothing adverse could be pointed out by the AO and accordingly disallowance was deleted. We have further noticed that Ld. CIT(A) has passed very reasoned order after personally examining all the facts which were furnished before the AO by assessee. The reasons and findings given by the Ld. CIT(A) are based upon the evidences and decision taken by the Ld. CIT(A) is in accordance with facts and circumstances of the case.- Decided in favour of assessee Disallowance on account of interest paid on secured loans - CIT(A) deleted the addition - Held that:- CIT(A) observed that the assessee firm was having interest free funds of ₹ 1,19,27,831/- in the form of credit balance of the partners as on 31.03.2008. The loans on which no interest had been charged is ₹ 30,50,000/- only and therefore, disallowance made by the AO was deleted. It is noted by us that factual findings have been given by the Ld. CIT(A) that ample amount of funds of the partners were lying with the assesee firm, on which no interest has been paid by the assessee firm to its partners. These factual findings have not been rebutted by the Ld. DR. The findings of the Ld. CIT(A) are justified and the order of the Ld. CIT(A) on this issue is confirmed. - Decided in favour of assessee
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