Tribunal upholds CIT(A)'s decisions, dismissing revenue appeal. Excessive wages, hiring charges, service tax disallowance deleted.

The Tribunal upheld the CIT(A)'s decisions, dismissing the revenue's appeal and the cross objections of the assessee. The disallowance of excessive wages paid, excessive hiring charges, and service tax payable were all deleted due to lack of substantial evidence and justification by the assessing officer. The order was pronounced on 06-12-2016.

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Issues Involved:
1. Deletion of disallowance of Rs. 35,97,667/- on account of excessive wages paid.
2. Deletion of addition of Rs. 20,00,000/- on account of excessive hiring charges paid.
3. Deletion of disallowance of Rs. 3,81,229/- under section 43B on account of service tax payable.

Detailed Analysis:

1. Deletion of Disallowance of Rs. 35,97,667/- on Account of Excessive Wages Paid:
The assessing officer (AO) disallowed Rs. 35,97,667/- considering it as excessive wages paid by the assessee. The AO argued that the average salary paid to hired contract laborers was Rs. 400/- to Rs. 750/- per day and disallowed 20% of the wage payment amounting to Rs. 1,79,88,336/- without substantial evidence. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the disallowance, stating that the AO failed to provide any material evidence to support the excessive payment claim. The CIT(A) noted that the work performed was highly skilled and time-bound, with contracts involving significant penalties for delays. The CIT(A) found that the AO did not disprove the vouchers and registers maintained by the assessee, which indicated the genuineness of the expenses. The Tribunal upheld the CIT(A)'s decision, noting that the AO's disallowance lacked supporting material and evidence.

2. Deletion of Addition of Rs. 20,00,000/- on Account of Excessive Hiring Charges Paid:
The AO disallowed Rs. 20,00,000/- of the hiring charges paid to M/s Upendra Prasad Singh, Hi Tech Construction Pvt. Ltd., and H.D. Engg. Services, Baroda, considering them excessive. The AO compared the hiring charges and found them exorbitant without substantial evidence. The CIT(A) deleted the disallowance, noting that the payments were made to unrelated parties and there was no evidence of the payments being received back by the assessee. The CIT(A) observed that the local rates of hiring were high and the payments were reasonable. The Tribunal upheld the CIT(A)'s decision, stating that the AO's disallowance was not based on cogent or justifiable reasons and lacked supporting evidence.

3. Deletion of Disallowance of Rs. 3,81,229/- under Section 43B on Account of Service Tax Payable:
The AO disallowed Rs. 3,81,229/- under section 43B, stating that the assessee could not furnish a proper explanation for the service tax payable. The CIT(A) deleted the disallowance, explaining that the service tax amount of Rs. 3,81,229/- had not become due and payable as of the audit date. The CIT(A) noted that the service tax was not debited to the Profit & Loss account, and the ratio of the Delhi High Court decision in CIT v/s Noble and Hewitt India Ltd. applied. The Tribunal upheld the CIT(A)'s decision, confirming that there was no liability on the assessee to pay the service tax as on 31-03-2008 and the amount was not debited to the P & L account.

Cross Objections:
The assessee filed cross objections supporting the CIT(A)'s order, which included:
1. Deletion of Rs. 35,97,667/- being addition made by the AO as excessive wages paid.
2. Deletion of Rs. 20,00,000/- being lump sum addition made by the AO as excessive hiring charges paid.
3. Deletion of Rs. 3,81,229/- disallowed by the AO as service tax payable.
4. Deletion of interest charged under section 234.

Since the Tribunal dismissed the revenue's appeal, the cross objections filed by the assessee were deemed redundant.

Conclusion:
The Tribunal dismissed the revenue's appeal and the cross objections of the assessee, upholding the CIT(A)'s decisions on all issues. The order was pronounced in the open court on 06-12-2016.

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