TMI Blog2017 (2) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees who were involved in the construction work. The AO has not doubted the genuineness of the claim of expenses. It is also note that the case of the AO that the assessee failed to prove the expenditure or fail to produce cogent and convincing evidence in support of the claim of expenditure and therefore, there is no good reason to disallow the expenditure claimed by the assessee on adhoc basis. It is also not in doubt that the expenditure is not for the purpose of business. The only reason for disallowance of expenses was that the assessee is unable to submit any log-sheet bifurcating salary expenses for CWIP and the claim made against cargo handling activities. In reply to this the assessee has to explain that on the basis of rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat assessee has charged total salary cost at ₹ 7,03,11,282/- during the financial year 2009-10 and claimed deduction on account of salary wages at ₹ 2.32 crores in the P L A/c and balance ₹ 4,70,53,459/- was debited to current work in progress and not claimed as deduction. According to AO, the assessee earned Cargo Handling Income from Essar Logistics Ltd. and claimed the same as salary establishment expenses at ₹ 2.32 crore and charged to the P L A/c. Before AO assessee explained that the total salary of the office staff involved in the operation activity and construction activity amounting to ₹ 7,03,11,282/- during the year. Out of this, the salary expenses of ₹ 2,32,57,8231- has been debited to Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are exclusively for the purpose of income earned in face of the fact that manning and management expenses in the nature of salary is already claimed against cargo handling income. Further it may be mentioned that the assessee has not submitted any log-sheet bifurcating salary expense for CWIP and that against cargo handling activities, it is also noted that assesse is having common salaried employees both for the purpose CWIP and revenue generating cargo handling activity and therefore, it is not possible to verify the same. Also debiting huge amount of salary against the only one receipt of cargo handling is not justified in so far as it has drastically reduced the taxable income from cargo handling income during the year under considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the appellant that it has reduced the expenditure on capital account and inflated the expenditure on revenue account. In the instant case, it is seen that the AO has summarily rejected the claim of the appellant, which is only a guess work and unsubstantiated apprehension of the AO. Under these circumstances, the disallowance of 50% salary without any convincing material, does not appear justified, hence the same is directed to be deleted. Aggrieved, now Revenue is before Tribunal. 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that the assessee during the F.Y. 2009-10 was in the process of setting up an all-weather deep draft dry bulk por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the project the assessee had incurred manning charges for crew amounting to ₹ 4,68,16,672/-. This amount has been debited to CWJP which is shown in the Balance Sheet. Accordingly, the total salary cost of the office staff of the assessee for the F.Y. 2009-10 amounted to ₹ 7,03,11,282/-. Out of this amount, the salary expenses of ₹ 2,32,57,823/- has been debited to Profit Loss Account while ₹ 4,70,53,459/- has been debited to Capital Work in Progress (CWIP). The assessee had identified the personnel who were involved in operations (cargo handling activity) and those who were involved in the construction activity and computed the CIC (cost to the Company) of these employees. The total CTC of these em ..... X X X X Extracts X X X X X X X X Extracts X X X X
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