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2017 (9) TMI 1028 - AT - Income TaxDisallowance of labour wages expenses, embroidery charges, fabrication expenses, and power and fuel expenses - assessment u/s 144 - AO has made the disallowances at the rate of 50% of all the expenditure - Held that:- In view of the fact that assessee is shown a receipt of ₹ 25 Lacs and out of which all these expenditures have been incurred by the assessee. Had the assessing officer has any doubt about the payment in cash, then such doubtful expenditure should have been disallowed and not ad hoc expenditure should be disallowed. It was also not pointed out by the Ld. assessing officer that whether there was any violation of the provisions of section 40A (3) of the income tax act, then also only such expenditure are disallowable which are hit by that provision otherwise the case payments are not prohibited as per the income tax act if they are below the limit specified therein. Further, the assessee has provided the details addresses of those service providers as appearing on the printed copy of the bills received by the assessee from those embroiderers and fabricators. There confirmation was also submitted at the time of original assessment. It was also not informed to the assessee that such persons were issued any notices and they have not remained present. It is also required to look that the nature of the business of the assessee, which is in the nature of a very small scale, and the assessee is getting work done through these small workmen who do not have any permanent place of residence. In view of this, we do not find any reason to disallow ad hoc expenditure by the Ld. assessing officer. - Decided against revenue. Unexplained cash credit - Held that:- As assessee has failed to discharge its initial onus with respect to credit of these parties were not trade creditors but lenders to the assessee for payment of sums to the other labourers, in absence of any confirmation, the addition has been correctly made by the Ld. assessing officer under section 68 of the income tax act - Decided against revenue.
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