9911796707
TMI Blog2015 (12) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,38,11,190/- under the head disallowance of contractor expenses". 3. The facts of the case are that the assessee is engaged in manufacturing /trading of material handling equipment like belt conveyors, screw conveyors, elevator, pipe conveyor and its related products. The assessee claimed direct expenditure paid to M/s. Erection India and M/s. Tekno Conveyor. The Assessing Officer observed in assessment order that the expenses claimed as payments made to the above two parties are bogus, accommodation entries and same was done to reduce the profit of the company while finalizing its accounts as it was evident from the journal entries made at the fag end of the financial year. Accordingly, the Assessing Officer disallowed an amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have carried on sub-contract for the assessee in the Vedanta project has neither disputed this fact nor alleged/held that it was not true. However, the Assessing Officer having accepted that they have in fact carried out this work has merely submitted in the remand report that without payment to labourers how the work was carried out and observed that sub-contractors have not deducted tax at source on such accrued labour charges. The undisputed established facts of the case are that the projects were awarded by M/s. Vedanta. In order to execute the project, the Assessee had engaged sub contractors viz. M/s. Teknoconveyor and M/s. Erecctions India. This was confirmed by the sub-contractors in course of remand proceedings. The sub-contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. This was duly verified by the site engineers of the assessee with regard to the quantity and on the basis of such approval, the invoices were raised by the subcontractor. The projects in respect Bauxite Grinding and Modification conveyors, M/s. Vedanta had issued Mechanical completion and Commissioning Completion certificate. Therefore, the sub-contractors have executed the projects. Further it was found that the assessee had been paying the dues to subcontractors in the subsequent years as and when it received amounts due from Vedanta. Most of the payments made by assessee in subsequent years are through banking channels. From the circumstances and the materials on record, it was further found that the assessee could not have exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible. Under the facts & circumstances of the case, it cannot be said that payments made to sub contactors are accommodating entries. Therefore, the Commissioner of Income Tax (Appeals) agreed with the contention of the assessee that the contract expenses are genuine and further held that sub-contract expenditure accrued on this account in the course of execution of the project was an allowable business expenditure. Hence, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee. Against this, the Revenue is in appeal before us. 5. We have heard both the parties and perused the materials on record. In this case, the Assessing Officer doubted the genuineness of the expenditure paid to M/s. Erection India and M/s. Tekno Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted the project and declared profit therefrom. There is no also allegation that profit declared by the assessee from the business is low as compared to the earlier assessment years. Once the assessee completed the contract and declared profits therefrom, it is to be construed that the assessee was able to complete the contract only after incurring the expenditure. In the present case, sub-contractors carried on the work of fabrication of Bauxite Handling system, modification of conveyor and reversible conveyer and thereafter they sent running bills towards the work carried on by them at the fag end of the financial year and the payments were made through banking channel in subsequent years, and the payments made in the subsequent assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is positive material to show that there are positive facts which may justify incurring the expenditure for the purpose of business, the assessing authorities cannot challenge reasonableness of the expenditure or incurring the expenditure. Thus, in our opinion, the Assessing Officer cannot substitute his own standard of reasonableness of expenditure for that of the assessee, as the assessing authority has not brought anything to show that the assessee adopted colourable or illusory or fraudulent means to reduce the profits to show the expenditure. In our opinion, in the present case the assessee proved the genuineness of the payment by producing cogent evidence including identity of the parties alongwith payment details and the burden ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
