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2015 (5) TMI 713 - AT - Income TaxAddition under section 41(1) - amount of creditors remained unpaid for more than 3 years - CIT(A) deleted the addition - Held that:- We find that no material was brought on record by the revenue to show that the liabilities ceased to exist and the assessee has obtained the benefits in respect of such liabilities by way of Remission or cessation thereof. Further it has been admitted by the Revenue that the assessee has not written off the outstanding liabilities in the books of account. In the above facts and circumstances of the case, the decision of the Hon’ble High Court of Gujarat in the case of CIT vs. Nitin S. Garg (2012 (5) TMI 30 - Gujarat High Court) squarely applies. Therefore, we confirm the order of CIT(A) - Decided against revenue. Addition on account of excessive payments made for purchase of metal from the person specified under section 40A(2)(b) - CIT(A) deleted the addition - Held that:- According to us, the lower authorities should have disallowed at the rate of 27% of purchase of metal from M/s MRB Builders Pvt. Ltd. and at the rate of 10.42% on purchases of grit from M/s MRB Builders Pvt. Ltd. Thus, both the lower authorities were not justified in their action. We find that the bifurcation of total purchases of ₹ 14,45,366/- as to how much for metal and how much was for grit has not been brought on record by either of the lower authorities and by either of the parties before us. We, therefore, set aside the orders of the lower authorities, and restore the matter to the file of the AO with direction to restrict the disallowance under section 40A(2) (b) to the extent of 27% in respect of purchases of metal from M/s MRB Builders Pvt. Ltd. and at the rate of 10.42% in respect of purchases of grit from M/s MRB Builders Pvt. Ltd - Decided partly in favour of revenue for statistical purpose. Disallowance of gratuity payment, legal & professional fees and misc. expenses - CIT(A) deleted the addition - Held that:- in order to make sustainable disallowance, it must be shown on the basis of some material on record that the claim made by the assessee was incorrect or fraudulent. Accounts of the assessee are audited and the auditor has certified the correctness of the claim of the expenses. Hence, without any material, it would be incumbent on the A.O. to accept the claim. In the absence of any material defects in the claim, in his opinion, the A.O. was not justified in making the disallowance of ₹ 8,55,313/- and, therefore, he deleted the same. - Decided against revenue. Addition on retention money accrued to the assessee company - Held that:- It is not in dispute that the assessee had not included retention money in its income on the ground that the money will be received after satisfactory completion of work and removal of defects. Till that time the right to receive the amount did not accrue to the assessee. We find that the Hon’ble High Court of Gujarat in the case of the assessee itself in A.Y. 1992-93 held that where assessee was awarded a construction contract and in terms of contract certain amount was withheld by employer of contract towards retention money for satisfactory execution of contract by assessee, retention money was to be taxed in assessment year relevant to ‘previous year’ in which it became payable to assessee as per terms of contract i.e., after defect liability was over and after engineer-in-charge certified that no liability was attached to assesse. Thus addition deleted - Decided in favour of assesse.
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