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2015 (12) TMI 507 - ITAT COCHIN

2015 (12) TMI 507 - ITAT COCHIN - TMI - Disallowance of expenses - @ 1% of total expenses by CIT(A) instead of 10% made on account of inflation of expenses relating to earth work, excavation, filling and leveling by AO - Held that:- there is every possibility of leakage of the revenue on account of various work done along with labour payments declared by the assessee. Accordingly, the Ld. CIT(A) is not justified in restricting the addition to 1% instead of 10% of expenditure disallowed by the As .....

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/s 194C - Disallowance u/s. 40(a)(ia) - CIT(A) deleted the addition - Held that:- The undisputed facts in the present case are that the tax at source has to be deducted on the impugned payments u/s. 194C of the Act which has been conceded by the Ld. Counsel for the assessee as well. The Ld. CIT(A) has relied upon the decision of the Hon’ble Apex Court in the case of Hindustan Coco Cola Pvt. Ltd. [2007 (8) TMI 12 - SUPREME COURT OF INDIA ] wherein it was held that if the recipient has shown this .....

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40(a)(ia) - CIT(A) deleted the addition - Held that:-. A new theory has been developed by the Ld. CIT(A) that blasting work has not been given to any contractor and rather the same has been undertaken by the assessee himself by appointing leaders in each group and making direct payment to the workers by maintaining muster rolls for each site and assessee has maintained cash payment vouchers to each person for such work. No such evidence was placed before the Assessing officer or even before us .....

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t which, in fact, has not been deducted by the assessee under the head blasting work and therefore, the disallowance made under the provisions of section 40(a)(ia) is directly applicable. - Decided in favour of revenue. - ITA No. 353/Coch/2014 - Dated:- 16-11-2015 - B. P. Jain, AM And George George K, JM For the Appellant : Shri K P Gopakumar, Sr. DR For the Respondent : Shri Mathew Joseph, CA ORDER Per B P Jain, Accountant Member This appeal of the Revenue arises from the order of the Ld. CIT(A .....

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tion, filling and leveling. The Ld. CIT(A) ought to have considered the following facts while deciding the issue: (i) The assessee has not produced any proper supporting evidences except the self made vouchers which do not have the names and addresses of the payee. (ii) The muster roll relied on by the Ld. CIT(A) had not been produced before the Assessing officer. 3. The Ld. CIT(A) erred in deleting the disallowance of ₹ 1,72,696/- made u/s. 40(a)(ia). The Ld. CIT(A) has allowed the assess .....

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submission made by the assessee before her and the same is contrary to the stand taken by the assessee before the Assessing officer. Also, the Ld. CIT(A) ought to have considered following fact while deciding the issue:- (i) The muster roll said to have been produced before the Assessing officer had actually not been produced by the assessee before the Assessing officer and no such argument was raised during the course of assessment proceedings. 5. For these and other grounds that may be urged .....

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eriod was ₹ 14,07,56,468/- out of which ₹ 28,75,425/- was the value of materials supplied by the contractee departments. The closing work in progress disclosed is 2,80,10,000. On examination of accounts, it was found that the expense debited under the heads Earth work, Earth work excavation, Earth work filling and Earth work levelling amounts of ₹ 8,84,480/-, ₹ 1,87,07,400/-, ₹ 1,85,63,750/- and ₹ 1,16,12,610/-. The entire payments are cash payments,. Assessee .....

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ims, it is true that assessee has to incur expenses to carry out their work. But the volume of the expenditure is too large and assessee is quite indifferent in respect of the required evidence. It is likely and almost certain that the expenses claimed are inflated. In order to bring the probable income that escaped assessment a part of the amount, out of the expenditure claimed under these heads are to be disallowed. 3. Assessee s net business profit disclosed is only 5.4%, i.e.,., (7605433/140 .....

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g these facts, part of the expenditure claimed without any supporting evidences, under the above heads, are disallowed being unexplained expenditure. Accordingly, 10% of the expense claimed under Earth work, earth work excavation, earth work filling and earth work leveling are disallowed. The addition so made being expenses not supported by evidence is worked out at ₹ 49,77,024/-. The percentage of profit after including the disallowance will work out to 8.93% which is quite reasonable.&qu .....

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pted by the appellant that the complete names and addresses of such daily labours were not maintained by the assessee, but it submitted that it is not practically possible in engaging labour on a daily basis. Since all these details were maintained and were also furnished during the course of assessment proceedings the assessing officer is not justified in making addition on estimated expenditure on this account. The assessee has further submitted copy of sample bank account showing that regular .....

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rolls and internal vouchers it is correct that the assessing officer has not brought out any definite statement as to how this expenditure has not been made by the assessee. However, as the names and addresses of various persons to whom these payments have been made have not been maintained by the assessee, the estimated percentage of expenditure made on this account is restricted to 1% of the expenditure. Accordingly, the addition of ₹ 48,77,024/- made by the assessing officer is reduced .....

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te the nature of work under each head. Furnishing of month-wise statement with regard to such expenses before the Ld. CIT(A) does not tantamount to the evidence of incurring of such expenditure by the assessee. The cash withdrawn from the Bank has been used for making labour payments does not substantiate the claim that the cash has been paid to the labourers of the assessee. In the circumstances and facts of the case, the Ld. CIT(A) is not justified in restricting the disallowance to 1% instead .....

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oned hereinabove, with regard to Earth work excavation, Earth work filling and Earth work levelling have been debited in the Profit and Loss Account of the assessee and such expenses have been declared to have been incurred but they are not supported with any of the evidence whatsoever. The month-wise statement furnished before the Ld. CIT(A), in fact, is no evidence for incurring of expenses, as has rightly been argued by the Ld. DR. None of the evidence with regard to incurring of labour expen .....

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of 10% of expenditure disallowed by the Assessing officer which in fact is without any basis. Though no past trends have been placed on record, however, in the circumstances and facts of the present case, the disallowance of 1% of expenses made by the Ld. CIT(A) is very much on the lower side and therefore, we restrict the disallowance on account of various expenses, as mentioned hereinabove, to 8% instead of 10% disallowed by the Assessing officer, to meet both the ends of justice. Thus, the or .....

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h is not a banking company to which Banking Regulation Act, 1949 applies. Therefore the provisions of TDS u/s. 194A will be applicable to this payment of interest. Since the assessee has not deducted tax from the said payment, the interest payment amounting to ₹ 1,72,696/- is disallowed applying the provisions u/s. 40(a)(ia) of the Income Tax Act, 1961." 10. The Ld. CIT(A) has deleted the addition by observing as under: "I have gone through the assessment order and the submission .....

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ntentions and perused the facts of the case. The undisputed facts in the present case are that the tax at source has to be deducted on the impugned payments u/s. 194C of the Act which has been conceded by the Ld. Counsel for the assessee as well. The Ld. CIT(A) has relied upon the decision of the Hon ble Apex Court in the case of Hindustan Coco Cola Pvt. Ltd. wherein it was held that if the recipient has shown this income in its return of income, then such disallowance would amount to double dis .....

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In the circumstances and facts of the case, as discussed hereinabove, Ground No. 3 of the Revenue is allowed. 13. As regards Ground No. 4, the brief facts of the case as emanating from the order of the Assessing officer at pg. 3 are reproduced herein below for the sake of convenience: "5. Assessee has claimed a sum of ₹ 44,37,820/- under the head "Blasting work". The evidence produced by the assessee is six numbers cash voucher books. These vouchers are not numbered. Three .....

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e voucher books shows payments made to Sri Sivadas for Venmani site for the period 03/04/2008 to 20/08/2008, payments made to Sri Narayanan for Adimali site blasting work from 21/08/2008 to 10/01/2009 and the third one for payments made to Sri Pradeep for Adimali site blasting work from 13/01/2009 to 31/03/2009 (photocopies, 12 numbers - 6 sheets annexed). The explanation offered by the assessee s representative at the time of hearing was that the blasting work involves blasting of rocks by use .....

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ax at source the payment debited under the head blasting work attracts provision u/s. 40(a)(ia) of the Act. Accordingly the provision u/s. 40(a)(ia) of the I.T. Act, 1961 is applied and the sum of ₹ 45,37,820/- claimed as blasting work is disallowed. " 14. The Ld. CIT(A) has deleted the said addition and the relevant findings of the Ld. CIT(A) are reproduced herein below for the sake of convenience: "7.3 I have gone through the assessment order and the submissions of the assessee .....

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holding and presuming that such work could be done only through licensed person, and therefore even if the payments were made to the labourers through leaders/employees of the assessee, the provisions of section 40(a)(ia) would be applicable. The Assessing officer while making this disallowance has not brought out any defect in the books of accounts or the muster rolls and internal payment vouchers that were maintained by the assessee, as to how they are not valid. The assessing officer has men .....

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rovisions of section 40(a)(ia) and accordingly, the addition of ₹ 45,37,820/- made by the assessing officer is hereby deleted." 15. We have heard the rival contentions and perused the facts of the case. The undisputed facts of the present case are that the assessee had produced six numbers of cash voucher books which showed the payments made to one Shri George, the other to Shri Sivadas and the last to Shri Pradeep for each site blasting work for different periods. The blasting work i .....

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