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2014 (4) TMI 970

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....see gets work order after submission of tenders. It is claimed by the respondent-assessee that it is maintaining regular and proper books of accounts supported by material and relevant records and accounts are also audited by a Chartered Accountant. 3. The Assessing Officer (for short, "AO"), during the course of assessment proceedings, desired the respondent-assessee to explain the nature and source of payment debited on account of job work charges to the extent of Rs.2,51,80,655/- and particularly of three sub-contractors namely; Shri Bhura Ram Chaudhary, M/s. Payal Builders and Consultants & Gautam Builders and Consultants to whom substantial payments amounting to Rs.24,49,757/-, 27,92,267 and 16,47,516/- respectively have been made and finding that the amount being substantial desired further particulars and evidence with reference to the said payments to the said three sub-contractors. 4. The respondent-assessee had claimed an expenditure of Rs.50,18,663/- under the head of Soil testing and surveying expenses and with reference to the same as well, further evidence was desired by the AO. There was a third claim with reference to the remuneration/salary to one Shri Viswas Jai....

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....tly increased by double to Rs.24 lac during the previous year relevant to the year under appeal when the AO observed that there is no major change of duties and responsibility. He further observed that one Alam Singh, who was a technical person, being Engineer and Professor in the field of Civil Engineering, was paid highest amount of Rs.2,40,000/- and therefore feeling that the salary paid is disproportionate, held that the salary of Rs.15 lac was reasonable and disallowed Rs.9 lacs. 8. Dissatisfied with the said disallowances, an appeal came to be preferred before the CIT(A). The respondent-assessee submitted a detailed explanation stating that the results have been fair and reasonable and there was overall growth in the receipts and when receipts are substantially better, the consequential expenditure had also to be incurred. It was contended that all the expenses paid to the sub-contractors are by account payee cheques and they are being assessed to IT Act and even tax deduction at source was made from their respective payment as subcontractorship and it is none of the duty of the respondent-assessee to find out whether they are filing returns under presumptive scheme or other....

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....pellate authorities have found, as a finding of fact, that the receipts have sharply increased in comparison to the stated expenditures, then no disallowance was required to be made and fully supported the order of the ITAT and submitted that no question of law arise out of the order of the ITAT. 12. We have considered the arguments advanced by counsel for the parties and gone through the impugned orders as well as the orders of the lower authorities. 13. In so far as the payments to sub-contractors are concerned, it is noticed that all the payments are by account payee cheques and the work, which the respondent-assessee is doing, certainly required sub-contractorship to look into various other jobs which possibly the respondent-assessee was unable to handle on its own. Admittedly, Shri Bhura Ram Chaudhary appeared before the AO, accepted that he has worked for the respondent-assessee and had also received payments from the said concern. One may not remember after lapse of years as to exact amount having been received from a particular concern and therefore, to say that there was discrepancy in the statements of Shri Bhura Ram Chaudhary is not proper. He had already conveyed that....

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....4. In so far as the disallowance out of the Soil testing and surveying expenses is concerned, both the ITAT as well as CIT(A) have correctly disallowed the deletion and there was no occasion for any adhoc disallowance out of the said expenditure at the rate of 10%. The CIT(A) so also the ITAT had considered the matter after analyzing the details submitted before them and it has been observed by the CIT (A) and approved by the ITAT that the receipts by the assessee were to the extent of Rs.85,75,162/- as against the expenditure of Rs.50,18,663/-. Therefore, even the receipts are substantially higher than the expenditure and in our view, the disallowance deleted by the CIT(A) and approved by the ITAT cannot be faulted with. 15. In so far as the salary/remuneration to the Chairmancum- Managing Director Shri Viswas Jain to the extent of Rs.24 lac is concerned, in our view, it is for an assessee, a businessman, who happens to be well versed in running business/profession to come to a conclusion as to what remuneration/salary is to be paid to an employee and in our view, reasonableness is to be judged from the angle of a businessman rather than from the angle of the AO who may not be aw....