TaxTMI 
TaxTMI 
2013 (10) TMI 788
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....e revenue confirming the order passed by the learned CIT(A) deleting addition of Rs.53,59,150/- made by the AO on account of disallowance of sub-contractor expenses as well as deleting addition of Rs.12,85,000/- made by the AO on account of disallowance of hiring charges. 2.00. That the appellant has raised the following proposed substantial question of law : (A) Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting the addition of Rs.53,59,150/- made on account of unverifiable expenses made to subcontractors. (B) Whether in the facts and in law the Tribunal was right in deleting the addition of Rs.12,85,000/- made u/s. 37 of the Act though requirements of the Section are ....
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....e said appeal, which gives rise to the present appeal. 6.00. Mr.Manav Mehta, learned counsel appearing on behalf of the appellant - revenue has vehemently submitted that the learned ITAT has materially erred in confirming deleting the disallowance of Rs.53,59,150/- which was disallowed by the AO on account of unverifiable expenses made to the sub-contractor. It is submitted that it was found by the AO that as such one of the sub-contractors was the employee of the assessee and therefore, the amount alleged to have been paid to the said employee, who was shown as sub-contractor was not genuine and therefore, the learned AO rightly disallowed the same. It is submitted that considering the overall facts and circumstances when the AO disallo....
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....scharged its onus of providing the sub contract expenses by submitting the complete names, address, PAN, confirmations, IT returns and bank statements of the sub-contractors as also the details of TDS and proof for payment made by account payee cheques, however, the AO has not been able to prove by bringing any evidence on record that the sub contract expenses are non genuine. Further, the contention of the appellant that it has achieved better book results by assigning sub contract work directly by weight in it, since it has achieved a direct profit margin of Rs.8.33 lacs @ 6.88% on the direct sub contract work of Rs.1.12 crores as passed by it and even otherwise allocation of work to sub contractors or doing it on own accounts is the busi....
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....hence I am of the opinion that it cannot be a ground for disallowing 25% of the total sub contract expenses. Hence, considering the fact that the book results of the appellant have improved considerably during the current year as compared to the earlier years and that the appellant has fully discharged the onus of proving the sub contract expenses and the AO has no proper ground or corroborative evidence and making ad-hoc disallowance of 25% out of the total sub contract expenses. I am of the view that the ad-hoc disallowance of Rs.53,59,150 @ 25% out of sub contract expenses as made by the AO is incorrect and the same is hereby deleted. In the result, first ground of appeal of the appellant in respect of ad-hoc disallowance out of sub c....