Service charge deduction upheld where statutory registers and vouchers were not specifically disproved by the Revenue.

Service charge expenditure paid to employees could not be disallowed merely on suspicion where the assessee produced annual accounts, wage registers, vouchers, service charge registers and a settlement with the workers' union. The records were not specifically found fabricated or false, and the statutory wage register carried a presumption of validity. Reliance on statements of a few employees, without examining the full evidentiary record or showing that the settlement was a sham, was insufficient to reject the claim. The appellate relief based on verifiable documents was therefore sustained, and the assessee's service charge deduction was substantially accepted on the evidence produced.

---

---

Issues: Whether the disallowance of service charges paid to employees was justified on the ground that the assessee had failed to substantiate the claim with credible evidence.

Analysis: The assessee produced annual accounts, income statements, wage registers, vouchers for cash payments, service charge registers, and a memorandum of settlement with the workers union. These materials were not disbelieved by the Assessing Officer by any specific finding of fabrication or falsity. The statutory wage register carried a presumption of validity, and the settlement with the union could not be brushed aside in the absence of a finding that it was a sham. The Assessing Officer relied only on statements of a few employees and did not examine the full evidentiary record or afford an adequate basis to reject the vouchers and registers. The partial relief granted by the appellate authority was founded on verifiable documents and was not merely on conjecture.

Conclusion: The disallowance could not be sustained in full, and the assessee was entitled to relief.

Final Conclusion: The interference with the appellate relief was unwarranted, and the assessee's claim for service charge expenditure was substantially accepted on the evidence produced.

Ratio Decidendi: Statutory registers and supporting vouchers cannot be rejected on suspicion alone when they are not specifically disproved by the Revenue.

---