TMI Blog2018 (5) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the FAA is not as per the law. As a representative of the State, he is supposed to be an instrument in collecting due taxes and pass and adjudication order based on the evidences. As he has failed to do so, therefore, reversing his order we decide first ground of appeal in favour of the assessee. Disallowance of staff welfare expenses - Held that:- As AO said assessee was engaged in constructing villas in remote area. Considering the above fact, in our opinion, expenditure incurred for purchasing television sets, refrigerators etc. cannot be disallowed. The necessity of the business is to be decided by the assessee itself and not by the AO. It is not the case of the revenue authorities that those items were used by the family of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction activity, filed its return of income on 15/10/2010 declaring total income at Rs. NIL. The Assessing Officer (AO)completed assessment u/s. 143(3), on 05/03/2013, determin - ing the income of the assessee at ₹ 42. 53 lakhs. 2. First ground of appeal is about disallowance of ₹ 21. 31 lakhs paid to R. R. Trading (RRT). During the assessment proceedings, the AO found that the assessee had debited ₹ 81. 54 lakhs under the head staff welfare expenses. He disallowed ₹ 21. 31 lakhs paid to RRT, ₹ 4. 14 lakhs paid to Suraj Novelties (SN) out of the above. The AO found that the bills for ₹ 23. 31 lakhs were raised in the name of Della Technicia and not in the names of the assessee. He held that the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard the rival submissions and perused the material on record. We find that the entire controversy has arisen as the bills issued by RRT were the names of Della Technician and not in the name of the assessee, that RRT in its letter dated 29/01/2013 has specifically mentioned that inadvertently bills belonging to the assessee were issued in the name of Della Technicia. We are unable to understand as to why the FAA discarded this evidence though the same was produced before him. He could have called for remand report or could have examined RRT in that regard. But, he simply confirmed the order of the AO. In our opinion the course adopted by the FAA is not as per the law. As a representative of the State, he is supposed to be an instrume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, that same were spent wholly and fully for staff welfare, that it had to provide facilities to the staff and the workers at the site. The DR supported the order of the FAA. 3.3. We have heard the rival submissions. We find that there is no dispute about incurring of expenditure. The AO/FAA has not doubted genuineness of the expenditure. They have disallowed the expenditure holding that same was not incurred wholly and exclusively for the business of the assessee. We find that the AO, on the first phase of the assessment order, has specifically mentioned that assessee was engaged in constructing villas in remote area. Considering the above fact, in our opinion, expenditure incurred for purchasing television sets, refrigerato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing our order for the first GOA , we allow ground No. 3. 5. Disallowance of ₹ 1. 51 lakhs out of the labour charges has been challenged in the next ground of appeal. During the assessment proceedings, the AO found that the assessee had paid labour charges to 13 parties, that it did not furnish any details about the tax deducted at source. He observed that out of the 13 parties it had furnished few bills of only three parties. After considering the details he held that labour charges payment were not hundred percent genuine. He disallowed 10% of the total labour charges debited in the books of accounts, amounting to ₹ 1, 51, 115/-. 5.1. Before the FAA, during the appellate proceedings, the assessee made submissions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed by the assessee from ₹ 29. 98 crore to ₹ 29. 55 crore, after adjusting the disallowance made in his assessment order. 6.1. The FAA, during the appellate proceedings, held that the AO had allowed the carry forward benefit of work in progress after reducing the expenditure disallowed by him in the assessment order, that the assessee had argued that deduction should be restricted to undisputed disallowances only. The FAA, rejecting the request of the assessee, held that he had already confirmed the disallowances, that the AO was justified in reducing ₹ 42, 53, 450/- from the total work in progress of the assessee for the year under consideration. 6.2. Before us, the AR stated that work in progress should b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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