2010 (5) TMI 888

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....ed in the business of civil construction contract work and labour contract. The assessee has filed its return of income declaring an income of Rs. 14,29,579/-. The assessee's case was selected for scrutiny by issuing notice u/s 143(2) of the Act. During the course of assessment proceedings, it was noticed by the AO that the assessee has debited labour charges in the P&L account to the extent of Rs. 1.10 crores and in the balance sheet out of the said expenditure a sum of Rs. 54,56,235/- had been shown as outstanding. The AO has also observed that the outstanding labour/wage payment was pertaining to the month of Jan, Feb and March 2005. The AO issued show cause notice to the assessee in respect of the outstanding labour charges/wages shown ....

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.... iv) It is also clear that this is a nature of expenditure which normally cannot be postponed by any assessee without making payment as they related daily earning casual labour/wage earners. In respect of this expenditure normally assessee has no way out to postpone meeting of such expenditure as daily bread and butter of the said labourers who come to the work entirely depend on this payment. v) Though assessee has come up with the financial crunch on account of various accounts the same cannot be an excuse for not meeting the labour wages payment. vi) Even going as per the principal only the wages payment for the last month of March, 2005 can be maximum outstanding and as per the details filed the same amount shown only....

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....financial crises, the assessee could not make the payment of the labour charges only in the month of Jan and Feb 2005 and made the issue for the two months outstanding. The ld counsel of the assessee also filed a copy of the assessment order for AY 2006-07 and submitted that the AO himself has accepted the payment made in that year. The ld counsel also relied the precedent in the case of ITO vs Hylam Securities & Finance P Ltd (178 Taxman 317). 3.1 Per contra, the ld DR supported the orders of the authorities below. It is argued that no worker will survive without the wages. He further argued that the story of the assessee is that the assessee made arragenement for daily needs of the labourers is not believable as it is an afterthought. ....