9911796707
TMI Blog2013 (12) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was selected for scrutiny and notice under section 143(2) was issued to the assessee on September 8, 2009. During the period relevant to the assessment year 2008-09 the assessee had undertaken the work for development of land owned by M/s. PACL India Ltd. for a total consideration of Rs.8,13,50,911. The assessee claimed expenditure towards labour charges amounting to Rs. 8.12 crores. The Assessing Officer sought details of the labour charges. The assessee in order to substantiate its claim produced muster roll which is alleged to be signed by the labourers engaged by the assessee. The Assessing Officer further observed that an amount of Rs. 40,000 on twelve occasions were paid to the supervisor for which no vouchers were produced. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is, an impossible task considering the huge number of labourers engaged by the assessee. The Assessing Officer without rejecting the books of account has disallowed 20 per cent. of the expenses incurred towards land development expenses in an arbitrary and unjustified manner. On the other hand, Shri Shaji P. Jacob appearing on behalf of the Revenue submitted that the assessee could not produce any document to show genuineness of the labourers. No confirmation letters from any of the labourers engaged by the assessee were placed on record. The assessee could not produce books of account as the same were alleged to have been lost/not traceable. The Departmental representative strongly supported the order of the Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards labour charges. However, in view of the fact that the assessee is engaged in civil construction activities which is labour intensive and the fact that the labour in such areas is unorganised, we therefore, in the interest of justice deem it appropriate to reduce the disallowance to 10 per cent. As far as disallowance of expenditure under section 40A(3) is concerned, we find that the provisions of section 40A(3) specifically bars the allowability of the expenditure made in cash over and above Rs. 20,000. The relevant extract of section 40A(3) is reproduced hereinbelow : "40A. Expenses or payments not deductible in certain circumstances.-(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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