TMI Blog2020 (9) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was not incurred or was bogus expenditure. This is a surmise. The fact of the assessee incurring this expenditure is not challenged by the AO. Hence, we are unable to sustain the addition in question. So, we delete the same. Addition on account of finance cost - Capital work in progress is a fraction of interest free funds held by the company. The propositions of law laid down in the case of Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] is that, in such circumstances interest free funds will be presumed to have been utilized for investing in non-income yielding assets. Applying this proposition of law to the facts of this case we hold that disallowance in question of interest is bad in law. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l calculations/formula based on earlier years data and not on facts or evidence. He submitted that these ad-hoc disallowances were made in an arbitrary manner though the assessee has furnished all the necessary documents and evidences to prove the genuineness of the expenditure. He pointed out that tax was deducted at source on labour charges and was remained to the Government, copy of which is placed at page 34 of the paper book. He vehemently contended that, in case there is an increase in expenditure in the subsequent year at best it would trigger an inquiry but not disallowance based on mathematical calculations/computation. He contends that all evidences were filed both before the AO as well as ld. CIT(A) and nothing wrong was found a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that the issue should not be restored to the file of the ld. CIT(A). 9. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, perusal of the papers on record and case laws cited, we hold as follows. 10. The AO disallowed labour charges by observing as follows: From the note no.24 forming part of P L A/c. it is observed that this year fresh claim of expenditure in labour charge of ₹ 32,30,821/- has been made. Though in course of assessment proceedings details of parties to whom this labour charges has been paid showing deduction of tax deducted at source have been furnished but assessee could not establish the requirement of this expenditure. So, the same is not accepted because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt filed before the AO giving the names and address of the contract labourers, the amount and the TDS made etc. is filed. The same is acknowledged as filed by the AO. At the bottom of this sheet an explanation was given as follows: During the year(F.Y 2013-14), we have to hire sum additional Labour on temporary basis for keeping the unit running in full speed. These Labours are contractual Labour, hence Labour Charges. During earlier there are no such need of hire such temporary workers. Therefore there was no labour charges in previous year. 12. The increase in expenditure for packed material was explained to the AO as follows: Different types of bags are used for different products such as laminated HDPE/PP bags Unlaminate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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