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The DCIT, Circle-9, Surat Versus Shailesh R Dhamelia

Addition under the head “ labour charges shown payable” - CIT(A) deleted the addition - assessee’s audit report had shown this sum as provision on current liabilities - Held that:- Its P & L forming part of the case file reveals diamond cutting labour charges expenses of ₹ 28,01,793/- up to 31/03/2007 i.e. much more than ₹ 2 lacs stated in assessment order. There is no other material quoted either in assessment or during arguments before us so as to dispute genuineness of this expend .....

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the ground that the same had not been put to use; is not justifiable. This lordships quote earlier decision reported as CIT vs. Sonal Hem Industries (2009 (2) TMI 84 - GUJARAT HIGH COURT). The Revenue does not point out distinction on facts and law. Its corresponding ground is accordingly rejected.- Decided against revenue.

Low household withdrawal addition - Held that:- It has come on record that assessee is a bachelor, and his father has already made withdrawal of ₹ 5,83,000/- .....

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edings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The Revenue s first substantive ground challenges lower appellate order deleting addition of ₹ 17,30,383/- under the head labour charges shown payable . The assessee s audit report had shown this sum as provision on current liabilities. The Assessing Officer was of the view that it had debited wages sums of ₹ 8,73,734/- for February and ₹ 10,56,649/- in March month and paid only ₹ 2 lacs to wor .....

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#8377; 19,30,383/- and added balance amount of ₹ 17,30,387/- in assessee s hands. 3. The CIT(A) has reversed Assessing Officer s action as follows:- 4.2. During the course of appellate proceedings, the AR of the appellant submitted that the main reason for the delay in payment of labour charges was the non-receipt of the job-work receipt for the month of February and March 2007 since, during this period on account of global recession the diamond industry was facing a tough time. The learne .....

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er and duly signed labour register and no defects therein has been pointed out by the AO nor has the AO doubted the genuineness of the labour expenses. Moreover, in making the impugned addition the AO has not even rejected the books results. Furthermore, the AR argued that the AO has erroneously computed the amount of labour payment per labourer per month at ₹ 918/- by considering only the payment of ₹ 2,00,000/- made for the month of March 2007 and also submitted the correct amount .....

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age labour payment per labourer per month works out to ₹ 3,159/- as shown in the above table, which under no circumstances can be considered as low. Moreover, it was also submitted that the AO has not brought any evidence on record to allege that the appellant had earned any income outside the books of accounts, so as to make the labour payments outside the books and there is also no evidence that the appellant had made any payment outside his books to the labourers. In view of these argum .....

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l on record to show that the appellant has earned any income outside the books of accounts or that the appellant has made any payment outside the books of accounts in the year under consideration. (c) The labour payments have been made by the appellant in the subsequent month of the next financial year which the AO has failed to verify. d) Not a single defect has been found out by the AO in the books of account of the appellant which was produced before him. (e) The AO has not made any inquiry w .....

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in presuming that the appellant might have made labour payment outside the books and therefore, I hereby delete the addition of ₹ 17,30,383/- as made by the AO for outstanding labour payments as at the year end. In the result, Ground of Appeal No. 1 of the appellant is allowed. 4. The Revenue strongly reiterates the Assessing Officer s inference drawn of labour payments of ₹ 918/- per household in first February month. The assessee strongly supports the CIT(A) s order under challenge .....

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he very amount in assessment order reads ₹ 6,54,480/- and one of that claimed of ₹ 9,24,475/-. The assessment happens to be the promoter of M/s. Amrut Impex and also runs independent business. He had shown only diamond cutting laser machine in case of the above stated concern. The Assessing Officer was of the view that Diamond OGI and Sarin maker machine had not been put to use. He quoted assessee s clarification stated to have been using machine provided by M/s. Vraj Diamonds only a .....

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g by laser machines on job-work basis, the diamond marker machines are used to first plan the shape, size and design and thereafter, cut it through the laser machines and hence, it cannot be alleged that the diamond marker machines are of no use in the diamond cutting activity carried out by laser machines. The AR further submitted that over and above the diamond laser cutting activity, he is also engaged in the business of importing of rough diamonds, manufacturing of polished diamonds and sale .....

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nth of March 2007 for planning the shape, size and design of the said imported rough diamonds also, over and above the use thereof in the activity of diamond cutting laser job-work and thus, the diamond marker machines have even been used in both the activities i.e. laser cutting job-work as also the activity of import of rough diamonds and manufacturing of polished diamonds. It was also submitted by the appellant that in the scrutiny assessment proceedings in his case for the earlier year i.e. .....

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not on a particular asset and thus, once an asset becomes a part of the 'Block of Asset' and depreciation is granted on that Block of Assets, the same cannot be denied in the subsequent year, on the ground that one of the asset of the said Block of Asset, was not used by the assessee in the said subsequent year. In support of this argument, reliance was placed on the decision of ITAT, Mumbai, in the case of Unitex Products Ltd. Vs. ITO (2008) 22 SOT 429 (Mumbai). In view of these submis .....

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Diamond Laser Machines. Thus, I agree with the appellant that the Diamond Marker Machines are also used in the activity of cutting diamonds on job-work basis and the appellant has also imported rough diamonds for polishing and hence; the said machines have also been used in that activity. Further, the depreciation on Diamond Marker Machines has been allowed to the appellant vide order u/s. 143(3) of the Act for the earlier year i.e. A.Y. 2006-07 also and there is no change in the nature of activ .....

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