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2021 (10) TMI 1073 - HC - VAT and Sales TaxValuation - permissible deduction for the purpose of computing the respondent’s taxable turnover or not - bank charges, guesthouse charges, fuel charges, computer expenses, and entertainment charges incurred by the respondent - expenses relatable to labour and other like charges or not - Rule 3 (2) (l) of the KVAT Rules? - HELD THAT:- Insofar as deductions in the nature of interest charged by the client towards postage, telephone expenses, etc. incurred by the dealer and also vehicles used exclusively used by the contractor in the execution of the works contract are concerned, a co-ordinate Bench of this Court in the case of Larsen & Toubro v. State of Karnataka [2009 (9) TMI 933 - KARNATAKA HIGH COURT] while considering the provisions under the Karnataka Sales Tax Act, 1957 has held that the said charges undoubtedly come within the scope of the cost of the establishment of the contractor to the extent it is relatable to supply of labour and services. The issue was also examined with reference to the principles laid down in Gannon and Dunkerley [1992 (11) TMI 254 - SUPREME COURT] wherein the Hon’ble Apex Court has held that the value of goods involved in the execution of works contract has to be determined after taking into consideration the value of the entire works contract after deducting the charges toward labour and services. All the deductions claimed by the assessee are relatable towards establishment charges as aforesaid which deserves to be allowed as deductible expenditure for arriving at the value of the goods. Otherwise, there will be a possibility of levying tax on an amount over and above the actual value of the goods, which is impermissible under law - the Tribunal has rightly allowed the appeal setting aside the finding of the authorities. The revision petition stands dismissed.
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