TMI Blog2010 (7) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05. 2. The first issue in this appeal of Revenue is against the order of CIT(A) in deleting the addition of ₹ 17,83,410/- made by Assessing Officer on account of labour charges. For this, Revenue has raised the following ground No.1:- 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting addition of ₹ 17,83,410/- being labour charges paid to the proprietary concern of the director u/s.40A(2) of the Act, disregarding the fact that infrastructure was not available with the said proprietary concern. 3. The brief facts are that the assessee is engaged in the business of testing of metals, heat treatment of metals, labour job-work and other activity relating to metalography, photo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work to Mangalam Engineers, so that not only delay in work is avoided but also specifications and standards are also met and proper services of testing metal sample can be rendered to customers in time and to their satisfaction. The AO has not considered the reply of the assessee as satisfactory and noted that assessee could have got the job work done directly from the open market instead of associate concern. He also noted that M/s. Mangalam Engineers received labour charges of ₹ 17.83 lakh as against the payment of labour charges at ₹ 12.71 lakh. Accordingly, he held the payments as unreasonable and excessive and disallowed the entire amount of ₹ 17,83,410/- u/s.40A(2)(b) of the Act. Aggrieved, assessee preferred appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleted. 4. After hearing the rival contentions and going through the facts of the case, we find that assessee from the very beginning making payments of labour charges, which were allowed. The assessee has filed complete details of labour charges yearwise, which reads as under:- F.Y. A.Y. Labour charges (Rs.) 1996-97 1997-98 5,20,835 1997-98 1998-00 11,32,330 1998-99 1999-00 12,45,680 1999-00 2000-01 13,00,870 2000-01 2001-02 12,58,725 2001-02 2002-03 11,04,690 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that assessee has filed complete details of labour expenditure including bills and vouchers but the AO could not point out any defect either in the books of account or in the vouchers. Even the AO could not point out the unreasonableness in the payment under this head. Accordingly, we are of the view that CIT(A) has rightly deleted the addition and we confirm the same and this issue of Revenue s appeal is dismissed. 5. The next issue in this appeal of Revenue is against the order of CIT(A) in deleting the estimated addition of ₹ 2.50 lakh made by Assessing Officer on account of depreciation. For this, Revenue has raised the following ground No.2:- 2. On the facts and in the circumstances of the case, the learned CIT(A) err ..... X X X X Extracts X X X X X X X X Extracts X X X X
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