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TMI Blog2017 (12) TMI 1780X X X X Extracts X X X X X X X X Extracts X X X X ..... this consolidated order for the sake of convenience. However, reference is being made to the facts and issues in ITA No.457/PUN/2016 to adjudicate the issues. 3. The assessee in ITA No.457/PUN/2016, relating to assessment year 2010-11 has raised the following grounds of appeal:- 1) The learned CIT(A) erred in confirming the disallowance made by the learned A.O. related to Labour Charges. The disallowance of labour charges was made on adhoc / estimated basis to the tune of Rs. 25,14,015/-. This amount was worked out being 5% of the total labour charges of Rs. 5,02,80,288.50. 2) The learned CIT(A) erred in not following the ratio of the High Court / ITAT decision(s) in the case of: a) Nisar Biri Sikkha No.1 Vs CIT 174 Taxmann 51 b) M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59,23,82,931/- under the account head 'site expenses', which mainly included labour expenses incurred at various sites. The said expenditure was approximately 75% of the total expenses incurred during the year. In the earlier financial year, the expenditure under the said account head was approximately Rs. 37.30 crores, which was 61.9% of the total expenses incurred in that year. The assessee in reply submitted that majority of execution of work requires unskilled labour, which was procured locally on daily wage basis or it gets labourers from nearby site, where the same kind of work is being executed. The labour expenses incurred at sites were booked as wages. However, the Assessing Officer noted that uder the Minimum Wages Act, the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantiate expenses made under the head 'site expenses' and also not maintained any muster roll or control register to monitor the said expenses, the Assessing Officer disallowed 5% of the site expenses at Rs. 2,96,19,146/-. 7. Before the CIT(A), the assessee claimed that adhoc disallowance of 5% of site expenses was not warranted. The first plea was that in addition to labour expenses, other expenses were also debited to the said account and the same cannot be disallowed. He further stated that complete vouchers were being maintained and many of the payments were being made through cheques. He further pointed out that out of total site expenses the labour charges were only of Rs. 5,02,80,288.50. Therefore, if at all any disallowance is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent assessment year i.e. 2011-12, the Assessing Officer has made disallowance of 5% of labour expenses only. Accordingly, the disallowance is restricted to Rs. 25,14,015/- i.e. 5% of Rs. 5,02,80,288.50. Thus, the appellant gets consequential relief of Rs. 2,71,05,131/-. Accordingly, this Ground of appeal is partly allowed." 9. The assessee is in appeal against the aforesaid disallowance of 5% of labour charges of Rs. 5.02 crores at Rs. 25,14,015/-. 10. Shri D.R. Barve, appeared on behalf of the assessee and Shri Mukesh Jha appeared on behalf of the Revenue and put forward their contentions. 11. We have heard the rival contentions and perused the record. The assessee had incurred labour expenses at various sites totaling Rs. 5.02 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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