9911796707
TMI Blog2019 (12) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... dited and all expenses supported by vouchers, bills, registers etc. and the Assessing Officer not having found any lacuna or mistake in Books of Accounts he ought to have allowed entire Labour Charges as claimed by the Appellant. (b) It is submitted that in view of facts of the consider provisions of Law entire Labour Expenses having been incurred during course of business of purposes of business and it being reasonable as per need of Business the disallowance of Rs. 47,07,974/- be deleted. It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly. Your Appellant reserves right to add, alter, amend to withdraw any or all Ground of Appeal. 3. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance of Rs. 47,07,974.00 on account of labour expenses. 4. The facts in brief are that the assessee is a private limited company and engaged in the business of mechanical and engineering job work. The assessee in its business hired two types of labours i.e. permanent labours/staff and temporary labours. The assessee has paid monthly salary of Rs. 12,000 to its permanent labo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rganizations. Therefore, the salary paid to them can be taken as benchmark for deciding the salary paid to the temporary labourers. As per the AO the payment to the permanent staff was much lower than the rate of salary/wages paid to the temporary labours. Accordingly he opined that the rate of salary paid to the temporary staff in excess to the permanent staff, who are more qualified and experienced, is unreasonable. 4.8. The payment of professional tax and PF on the amount of wages paid to the temporary staff does not justify the rate of salary paid to them. Similarly, the amount of net profit declared by the assessee cannot justify the reasonableness of the wages paid to the temporary staff as the work order of one year might be executed in the another year. 4.9. The AO in view of the above, the AO worked out the excessive salary paid to the temporary staff by observing as under: "3.6. From the submission filed by the assessee, it is evident that out of 7303 workers hired during the year, 2245 workers were claimed to have been paid wages in the range of Rs.450/- to Rs.800/-, whereas 5058 workers were claimed to have been paid wages in the range of Rs.250/- to Rs.445/-. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Assessing Officer's observations. The Assessing Officer has analyzed the payments made by the appellant to daily wage earners in his assessment order. The appellant has submitted its reply on the observations made by the Assessing Officer in his order. But no reply has been submitted on the most important observation made by the Assessing Officer in para 3.3 of his order which is as follows: "It is most important to note that all the payments claimed to have been made in respect of wages have been made in cash. This may have been required because of circumstances of the business of the assessee, but the fact remains that apart from some non-discreet and obscure signatures on vouchers and registers, there is no other evidence for such payments. The assessee do not have addresses of these individuals and it is not in the position to produce them for giving evidence." 4.3.1. The failure of the appellant is contradictory to its reliance during the course of assessment proceedings as well as during the course of appellant proceedings on the fact that it had deducted provident fund and professional tax on entire payment on such labour charges. The appellant had also produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of payments made to such workers. The workers to whom payments at higher rates have been done by the appellant are skilled labourers as accepted by the appellant itself and in such case their entire details must have been available with the appellant which have not been produced for cross verification by the Assessing Officer. Hence, the disallowance made by the Assessing Officer is upheld and the appeal is dismissed." Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 5. The learned AR before us filed a paper book running from pages 1 to 23 and submitted that the payment to the labourers were paid directly under the supervision of the supervisor after deducting the professional and PF amount on the wages paid to them. The learned AR also claimed that the ITAT in the earlier year has deleted the addition made by the AO in its own case bearing ITA No. 2238/AHD/20124 for the assessment year 2008-09 vide order dated 6 December 2016. 6. On the other hand, the learned DR vehemently supported the order of the authorities below. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the assessing officer about excessive wage payment was of general nature ignoring the fact that wages were paid on the basis of number of working days. The assessing officer had not considered the fact that the nature of the business of the assessee relate to job work of mechanical and engineering on contract basis with organization like refineries .petrochemicals such as IPCL IOCL Gail. Some of the jobs were of highly labor intensive involving skilled and experienced physical labour force at the site of the work. In view of the above stated facts and circumstances, we considered that assessing officer is not justified in making disallowance of Rs. 35,97,667/- without any supporting material and evidence, therefore, we uphold the decision of the Ld. Commissioner of Income Tax(A)." 7.3. At the time of hearing, the learned DR has not brought anything on record suggesting that the facts involved in the present case are different with the own case of the assessee for the assessment year 2008-09. Therefore, in our considered view the principles laid down by this tribunal in the own case of the assessee are squarely applicable to the case on hand. Accordingly, respectfully fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
