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2015 (8) TMI 1088 - ITAT CHANDIGARH

2015 (8) TMI 1088 - ITAT CHANDIGARH - [2015] 41 ITR (Trib) 124 (ITAT [Chand]) - Disallowance under section 40A(2)(b) - According to AO salary paid to Shri Amandeep Kumar was excessive as was only 10th pass and not technically qualified - Held that:- Both the sons of the assessee are doing same job for the assessee and merely because Shri Amandeep Kumar was not technically qualified would not give occasion for the Assessing Officer to disallow the salary substantially. It is not in dispute that t .....

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Assessing Officer has failed to make out a case of any unreasonable payment to the sons of the assessee. However, considering the fact that Shri Amandeep Kumar was not qualified as against the qualification of other son Shri Daniel, it would be reasonable and appropriate to restrict the salary paid to Shri Amandeep Kumar slightly lesser as was given to Shri Daniel because both of them were doing the same job for the assessee. Thus it would be appropriate to allow salary paid to Shri Amandeep Ku .....

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hat all the transactions have been done through banking channel and as such, it is unbelievable that the assessee has not purchased the crane in question. The authorities below have also failed to note that after purchase of the crane in question in assessment year under appeal, the total receipts of the assessee from crane business have substantially increased. Therefore, without purchase of the crane in question the receipts of the assessee would not have substantially increased. The Assessing .....

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authorities below are set aside and the addition is deleted. The Assessing Officer is directed to grant depreciation to the assessee as is claimed. - Decided in favour of assessee. - ITA No.684/Chd/2012 - Dated:- 25-5-2015 - SHRI BHAVNESH SAINI AND SHRI T.R.SOOD, JJ. For the Appellant : S/Shri Sudhir Sehgal & Shri Ashok Goyal For the Respondent : Shr i S.K.Mi t tal , DR ORDER Bhavnesh Saini (Judicial Member).- This appeal filed by the assessee is directed against the order of the learned Com .....

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had claimed an amount of ₹ 11,76,000 under the head "Salary and wages". Out of this, the assessee has paid salary of ₹ 2,25,000 to his son Shri Amandeep Kumar and ₹ 1,59,000 to his son Shri Daniel. The Assessing Officer noted that during the year maximum salary paid to the other employees is ₹ 84,000 per annum. The Assessing Officer further noted that Shri Amandeep Kumar was only 10th pass and not technically qualified. The Assessing Officer accordingly held th .....

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ob work basis for construction of bridges, heavy load machinery and in uplifting of machinery in furnaces meaning thereby the business/profession of providing the services with the aid of cranes which can basically be done by the young and energetic persons. The cranes could not be operated by every labourer and need experience to operate the same. Any mishappening of the cranes can cost in lakhs of rupees for its repair and maintenance. The safety of the cranes is also required. The assessee co .....

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during the year under appeal the receipts are of ₹ 76.72 lakhs, against which salary/wages were paid to the tune of ₹ 11.76 lakhs. The expenses are lesser as compared to the earlier years ratio and receipts are more as compared to the earlier years. Therefore, no unreasonable salary has been paid. It was also submitted that both the sons of the assessee were doing job for about 11 to 13 hours in a day, whereas the workers would be available for 6 to 7 hours in a day and considering .....

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ssive side. The assessee explained that both the sons have been working for the assessee for operating the cranes. The assessee is about 57 years of age and the nature of the work performed by the assessee was such that the help of others are required for operating the cranes. The Assessing Officer did not disallow any salary/wages paid to other son of the assessee Shri Daniel in a sum of ₹ 1,59,000. Both the sons of the assessee are doing same job for the assessee and merely because Shri .....

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essee have been working whole heartedly for the business of the assessee and through their efforts total receipts of the assessee have increased. Therefore, the Assessing Officer has failed to make out a case of any unreasonable payment to the sons of the assessee. However, considering the fact that Shri Amandeep Kumar was not qualified as against the qualification of other son Shri Daniel, it would be reasonable and appropriate to restrict the salary paid to Shri Amandeep Kumar slightly lesser .....

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deep Kumar would be restricted to ₹ 75,000 only. 8. In the result, this ground of appeal of the assessee is partly allowed. 9. On ground No. 3, the assessee challenged the addition of ₹ 1,74,000 on account of disallowance of depreciation on crane. 10. The brief facts are that the Assessing Officer noted that the assessee had claimed depreciation of ₹ 1,74,000 at 15 per cent. on a crane, which has been shown to have been purchased on April 1, 2007 for ₹ 11,60,000. The Asse .....

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t produce any documentary evidence in the form of purchase bill from M/s. Indo Construction and accordingly it was held that the assessee had not produced any evidence for ownership as well as usage for business purpose and accordingly disallowance was made. 11. The written submission of the assessee is incorporated in the impugned order, in which the assessee explained that payment of ₹ 15 lakhs was made to M/s. Indo Construction Company and after negotiation ₹ 3,40,000 were returne .....

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ssee used the crane in question for the purpose of business. It was submitted that the assessee has submitted documents of ownership of machinery along with the reply. The payments are made by means of account payee cheques, which have not been doubted. Therefore, the Assessing Officer should have allowed the depreciation on the crane so purchased. The learned Commissioner of Income-tax (Appeals), however, did not accept the contention of the assessee and dismissed this ground of appeal. The fin .....

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nt of M/s. Indo Construction in its books. The account reads as under : Date Particulars Voucher type Voucher No. Debit Credit 1.4.2007 To advance for crane trf. from advance for crane Ch. No. 170935 for P. N. Bank Journal 03 15,00,000 By crane (Indo Const.) Journal 04 11,60,000 12.4.2007 P.N.B.O/A0765002100432354 Receipt 04 3,40,000 15,00,000 15,00,000 In support of its claim for purchase of crane, the appellant sub mitted the bill issued by Indo Construction. As per this bill dated March 24, 2 .....

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date of sale on March 24, 2007. If the cost of crane was already settled on March 24, 2007 there was no reason of giving advance of ₹ 15 lakhs on March 26, 2007. Further, while in the written submission the appellant has claimed that cost of crane is ₹ 11,60,000, as per the purchase bill the cost is ₹ 10,40,000. The appellant also submitted a copy of account of the appellant in the books of M/s. Indo Construction. The account reads as under : Date Particulars Vch Type Vch No. .....

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w of these facts the disallowance made by the Assessing Officer on this account is confirmed. This ground of appeal is accordingly dismissed." 12. We have considered the rival submissions and perused the material available on record. 13. Learned counsel for the assessee filed copy of the balance-sheet of the assessee for the preceding assessment year ending on March 31, 2007, in which under the head "Loans and advances" as on March 31, 2007 a sum of ₹ 15 lakhs had been shown .....

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to the seller through banking channel. On the same date on April 1, 2007, another entry is made of ₹ 11,60,000 for crane. The copy of the same ledger account is filed at page 12 of the paper book, which further explained that the cost of the crane was ₹ 10,40,000 and ₹ 1,20,000 was the cost of loading of the crane from Delhi to Ludhiana and transportation, etc. Thus the total cost of the purchase of crane was ₹ 11,60,000. The rest of the advance amount of ₹ 3,40,000 .....

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unt but the purchase bill shows the date of sale as March 24, 2007. There is no such contradiction in the explanation of the assessee because advance of ₹ 15 lakhs was given in the preceding assessment year ending March 31, 2007. Therefore, the same would be the opening balance on April 1, 2007 in a sum of ₹ 15 lakhs as advance for crane. The purchase and transportation bills are of March 24, 2007, which were accounted for in the assessment year under appeal. Therefore, there is no a .....

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