2016 (5) TMI 152

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.... on 27.8.2009. On scrutiny of the accounts, it revealed to the AO that the assessee had debited an amount of Rs. 59,39,127/- with respect to the construction carried out at Jamnagar. It further merges out that the assessee has carried out construction work for M/s.Essar Construction (India) Ltd. The assessee has raised three bills totaling to Rs. 2,76,46,141/-. M/s.Essar Project Ltd. has sanctioned a sum of Rs. 2,17,07,014/-. There was a difference of Rs. 59,39,127/-. According to the assessee, it has carried out the work in the Asstt.Year 2005-06. The bills were raised in that year. The assessee has recognized the contract receipt of Rs. 2,76,46,141/- in the Asstt.Year 2005-06. In the accounting year relevant to the A.Y.2008-09. The assessee has written off a sum of Rs. 59,39,127/- on the ground that out of total bills raised by it against the Essar Construction Ltd., there are no chance to recovery of this amount, because, the payer has retained this amount on account of certain disputes. The assessee has claimed the deduction of this amount. The AO has disallowed the claim of the assessee. The twist of the dispute is that the assessee, instead of claiming it as bad debts, has re....

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.... stated that according to sec. 36(l)(vii) of the I.T. Act., if a debt has been written off as irrecoverable in the accounts of the assessee, it will sufficient for claiming bad debts and after amended provisions of this section w.e.f. 1st April 1989 word "established" has been deleted and once the assessee write off the amounts in the books of accounts, he is entitled to claim deduction for the same without further providing any evidence to establish the facts before assessing officer. The AR of the assessee relied on various judgments to prove his contention." 5. The ld.CIT(A) has accepted the contentions of the assessee and deleted the addition. 6. With the assistance of the ld.representatives, we have gone through the record carefully. We find that the assessee has submitted the details of receipts. He has disclosed the bill amounts, the amounts sanctioned by Essar Projects and the difference. The assessee has also disclosed invoice numbers to the AO and produced the details. The area of the dispute between the assessee and the AO are the interpretation given to the transaction. According to the assessee, it has recognized the contract receipts in the F.Y.2005-06, but could n....

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....ur directly deployed. The learned AO disallowed 10% of the above labour charges due to absence of PAN and full address of the laborers. The assessee maintains full set of labour register along with name, type of work done, wages paid and signature. The AR of the appellant further contended that each labourer had its designation also printed along with his name for example carpenter, plumber etc. Moreover the appellant has only two sites working in the year in concern one at Surat and the other at Vadinar, Jamnagar. Separate labour registers were maintained by the appellant for both the places. It was also vehemently argued before me that audit report with all books of accounts was produced before the AO. The assessee has shown an increase in gross profit 4.85% to 11.27% vis-a-vis the preceding previous year. The assessee was subjected to scrutiny u/s 143(3) in A.Y. 06-07 & 07-08 and no such addition were made in the year other than some minor estimated additions. Copy of such orders was submitted during the course of appellate proceedings before my office. The nature of business carried out by the appellant remains the same as in the earlier years. The only adverse inference that h....

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....T(A) contended that in the Asstt.Year 2007-08, the ITAT has upheld the disallowance at 10%. He placed on record copy of the Tribunal order passed in ITA No.3054/Ahd/2010. 11. On the other hand, the ld.counsel for the assessee contended that there were specific reasons for upholding the disallowance to the extent of 10% in the Asstt.Year 2007-08. He firstly contended that in the Asstt.Year 2007-08, the assessee did not produce the details of labour expenses, because, it was an ex parte assessment order. In the present year, the assessee has produced complete details. The AO has not pointed out specific defect in the details maintained by the assessee. The defect pointed out by the AO that the assessee failed to give permanent account number of the labourers with the Income Tax Department. The ld.counsel for the assessee has emphasised that all these labourers were hired by the assessee at site. They were not having any PAN and it was not possible at all for the assessee to ask them to have PAN. The assessee has submitted labour ledger which contained names of labourers in full, designated work in which he was employed i.e. carpenter, plumber, electrician etc. The amount of wages pa....