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2016 (4) TMI 1000 - AT - Income TaxDisallowance u/s 40A(3) - Held that:- As per the proviso below sub section 3A of Section 40A, it is seen that no disallowance is called for under section 40A(3) if it is found that there is business expediency for making payment in violation to the mode of payment specified in Section 40A(3). We have seen above that in the facts of the present case, the assessee is able to establish that there was business expediency to make cash payment to these nine parties because the assessee is getting supply only after some days of making cash payment and assessee also gets some help from Clause-f or Clause J of Rule 6DD although the assessee is not able to bring cogent evidence about applicability of these clauses of Rule 6D. But since, the assessee is able to establish business expediency by showing that the cash payment was made first and the supplies were received after a gap of five to ten days from all these nine parties and in view of applicability of Rule 6DD as claimed although could not be substantiated, we are of the considered opinion that disallowances u/s 40A(3) is not justified - Decided in favour of assessee Adhoc disallowance out of labour charges @ 10% - Held that:- Regarding the objection that there is only self made vouchers, we are of the considered opinion that this objection is not valid because for making payment to labourers, there cannot be independent bill. Regarding non maintenance of the register or Muster Roll, it is explained by the assessee that labour were put to work at different locations or projects undertaken by the U.P. Nirman Nigam and the attendance and the wages roll were maintained by the project manager of different units of Nirman Nigam and the assessee has made payments to different labours as and when required by petty labour after withdrawing cash from its bank and the assessee has not paid more than ₹ 20,000/- in a day to any labour in cash. It is also submitted that the assessee has got due payments from U.P. Nirman Nigam after verifying the number of persons employed at different places of the project supervised by them. Hence, it is seen that the assessee has made payment for the labourers engaged at different locations and the assessee was getting payment after verification of the number of persons employed at different places and the projects supervised by the U.P. Nirman Nigam. Sample vouchers for labour payments are available on pages 171 to 209 and in the back of all these vouchers, the names, amount and thumb impression/signature of all the labours are available. Thus we are of the considered opinion that under these facts and in the absence of any adverse material, adhoc disallowance of 10% of labour charges is not justified, we, therefore, delete the same. - Decided in favour of assessee
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