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2016 (5) TMI 152 - AT - Income TaxDisallowance of prior period expenses - Held that:- According to the assessee, it has recognized the contract receipts in the F.Y.2005-06, but could not realize the total receipts, and therefore, in the Asstt.Year 2008-09 i.e. F.Y.2007-08, he has reduced the sales. Had he claimed bad debts, there could not be any problem to the AO. In our opinion, instead of strictly going by the accounting treatment given by the assessee in the books, the ld.AO ought to have visualized the transaction itself and if a sale was recognized by the assessee and accounted in the books, on the basis of which, the total income was computed, but actually he failed to realize those sales, then, the unrealized amounts will be bad debt to the assessee or a business loss. That could be claimed by the assessee in subsequent period. The ld.AO has construed the transaction in different manner, as if assessee has claimed deduction of expenditure. In that context he made reference to the confirmation from ESSAR. He ought to have reconciled the contract receipt accounted by assessee on accrual basis and ultimately realized. It account has The ld.CIT(A) has considered this issue with this angle and deleted the disallowance. We do not find any error in the order of the ld.CIT(A) - Decided against revenue Disallowance of labour expenses - CIT(A) restricted it to 2% instead of 10% made by the AO - Held that:- has nowhere alleged the specific information which has disabled him to deduce the true income from the contract receipts of the assessee. What was the angle he wanted to inquire from the labourers ? The assessee has alleged that name, date of payment, site, designation of the workers i.e. carpenters, plumber, electrician etc. were disclosed to the AO. In spite of that, the AO simply disallowed 10% of the expenditure by observing that details were not submitted. The challenge of the assessee is which detail was not submitted to the AO. Before the ld.CIT(A) he had reiterated his contentions in the written submission. The ld.CIT(A), though concurred with the AO with regard to the submissions of the details, but scaled down the disallowance to 2% on adhoc basis. He made reference to his order in the Asstt.Year 2007-08 also. No doubt in the Asstt.Year 2007-08, the Tribunal has restored this disallowance to 10%, but reasons for such restoration was that no details were submitted by the assessee. It was an ex parte order. Had the assessee challenged the order of the ld.CIT(A), probably this 2% would have not remained there in this assessment year, because, in our understanding the AO has not made a case for adhoc disallowance at 10%. In view of the above discussion, we do not find any merit in these grounds of appeal.- Decided against revenue Non payment of employees’ contribution to the PF account within the time stipulated under the PF Act - AO has disallowed the claim - CIT(A) has deleted the disallowance - Held that:- This issue is squarely covered against the assessee by the decision of the Hon’ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corporation Ltd. [2014 (1) TMI 502 - GUJARAT HIGH COURT ] - Decided in favour of revenue
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