Works contract labour deduction and turnover additions require record-based proof; unsupported estimates and prior-year assumptions are impermissible.

A works contract deduction for labour, services and profit under Rule 9(1)(d) of the Uttar Pradesh VAT Rules, 2008 cannot be denied unless the accounts are disbelieved or the statutory basis for applying Rule 9(3) is established on the record; where no such finding exists, the deduction claim must be examined on the books and materials. Turnover cannot be enhanced by adding an alleged purchase of Khanda from earlier years unless there is evidence connecting that amount to the relevant assessment year. The matter required fresh examination on the available factual materials.

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Issues: (i) Whether, on the facts found, the assessee was entitled to deduction of the value of labour, services and profit under Rule 9(1)(d) of the Uttar Pradesh Value Added Tax Rules, 2008, or whether the authorities were justified in applying Rule 9(3). (ii) Whether an amount of Rs. 40,00,000/- could be added to the turnover on the ground of alleged purchase of stone (Khanda) in previous years.

Issue (i): Whether, on the facts found, the assessee was entitled to deduction of the value of labour, services and profit under Rule 9(1)(d) of the Uttar Pradesh Value Added Tax Rules, 2008, or whether the authorities were justified in applying Rule 9(3).

Analysis: Rule 9(1)(d) permits deduction of amounts representing the value of labour, services and profit thereon where such amounts are included in the gross receipt of a works contract. Rule 9(3) applies only where labour and service components are not separately shown, the accounts are not worthy of credence, or no accounts are maintained. The record disclosed no finding that the assessee's books of account were to be disbelieved or that the labour component was not separately shown. The authorities rejected the claim without the requisite examination of the books and materials.

Conclusion: The assessee was entitled to consideration of the deduction under Rule 9(1)(d), and denial of that benefit on the facts recorded was unjustified. The matter was to be examined afresh by the Tribunal in accordance with Rule 9.

Issue (ii): Whether an amount of Rs. 40,00,000/- could be added to the turnover on the ground of alleged purchase of stone (Khanda) in previous years.

Analysis: An addition to turnover must rest on material showing purchase or receipt in the relevant year. The mere fact that similar purchases may have been made in earlier years does not justify bringing the amount into the current year's turnover in the absence of supporting material for that year.

Conclusion: The addition of Rs. 40,00,000/- to the turnover was not justified.

Final Conclusion: The revision succeeded on both questions, the impugned determination could not be sustained on the existing findings, and the matter required fresh examination by the Tribunal on the relevant factual materials.

Ratio Decidendi: A labour and service deduction in a works contract cannot be denied unless the accounts are disbelieved or the statutory conditions for applying the deeming percentage are established on the basis of material on record; turnover additions must also be supported by evidence relating to the relevant assessment year.

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