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2016 (11) TMI 888 - AT - Income TaxDisallowance of Labour Charges - Held that:- we concur with and uphold the finding of the learned CIT(A) that in the absence of any material evidence being brought on record by the AO to prove that the payments made to these three related parties as bogus, the said payment of labour charges to him cannot be termed as bogus and the action of the so to discover the entire payment of labour expenditure, since they were incurred through related parties, is unjustified and unsustainable in the facts and circumstances of the case. - Decided in favour of assessee Adhoc disallowance of 25% of the expenditure incurred on labour charges paid to the three related parties - Held that:- Learned CIT(A) has failed to point out any particular expenditure in respect of labour charges which according to him is excessive or unreasonable but has proceeded to uphold an adhoc disallowance of 25% thereof, which is, in our view, unsustainable. In this view of the matter, we are of the opinion that the adhoc disallowance of 25% of expenditure incurred on labour charges paid to related parties under section 40A(2) of the Act was not warranted in the facts and circumstances of the case on hand as discussed above and therefore direct the AO to delete the same.- Decided against revenue Bogus purchases under section 69C - Held that:- Without causing any enquiries to be made to establish his suspicions, the AO cannot make the addition under section 69C of the Act by merely relying on information obtained from the Sales Tax Department. In the case on hand, the AO failed to make any enquiry to establish his suspicions. Further, the corresponding sales have not been questioned. We find that the assessee has brought on record documentary evidences to establish the genuineness of the purchase transactions, the action of the AO in ignoring these evidences cannot be accepted. When the copies of purchase bills of these parties, delivery challans, proof of payment through banking channels, etc., and there is no evidence brought on record by the AO to establish that the said payments were routed back to the assessee, the addition made by the AO under section 69C of the Act is unsustainable - Decided against revenue Disallowance of Motor car expenses - Held that:- In the order of assessment, the AO has made an adhoc disallowance of 20% of motor car expenses and depreciation thereof (i.e. ₹ 79,063/-). On appeal, the learned CIT(A) sustained this disallowance to the extent of 5%. Before us, except for raising this ground, Revenue has not brought on record any material evidence to controvert the finding of the learned CIT(A) and warrant our interference therein on this issue. In this view of the matter, we uphold the order of the learned CIT(A) on this issue - Decided against revenue Disallowance of Telephone Expenses - Held that:- AO has made an adhoc disallowance of ₹ 36,663/-; being 15% of telephone expenses amounting to ₹ 2,44,423/-. On appeal, the learned CIT(A) has sustained the disallowance to the extent of 5%. Except for raising the ground before us, Revenue has not brought on record any material evidence to controvert the impugned order of the CIT(A) and warrant our interference therein on this issue. In this view of the matter, we uphold the order of the learned CIT(A) on this issue. - Decided against revenue
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