2017 (2) TMI 27

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....order of CIT(A) deleting the disallowance of salary expenses amounting to Rs. 1,16,28,911/- (being 50% of salary expenditure of Rs. 2,32,55,901/-) incurred by the assessee in connection with its business of cargo handling operations. For this revenue has raised following ground No.1. "1. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) has erred in allowing the assessee's appeal by deleting disallowance of salary expenses amounting to Rs. 1,16,28,911/- (being 50% of salary expenditure of Rs. 2,32,55,901/-) incurred by the Co. in connection with its business of cargo handling operations." 3. Briefly, stated facts are that assessee has charged total salary cost at Rs. 7,03,11,282/- during the financial year 2009-10....

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....observing as under: - "The submission filed by the assessee is perused but found not fully acceptable. As discussed above, assessee has debited salary and establishment expenses of Rs. 2.32 crores to the P & L A/c. in addition to the manning and management expenses of Rs. 196 crores and other expenses of Rs. 55,00,000/ -against cargo handling income earned from Essar Logistics Ltd. In its reply, assessee stated that out of total salary expenses, an amount of Rs. 4,70,53,459/- is debited to CWJP. The assessee has failed to discharge its duty to prove that the expenses incurred are exclusively for the purpose of income earned in face of the fact that manning and management expenses in the nature of salary is already claimed against cargo han....

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.... the appellant, therefore it is the doubt of the AO that assessee has claimed more salary on income generating project and less to the capital project. It is the claim of the appellant that it has properly bifurcated employee-wise expenditure relating to revenue generating activities of cargo handling and relating to the capital work-in- progress. Under these circumstances, once the appellant has clearly bifurcated the expenditure relating to two distinct activities i.e. revenue generating and capital work-in-progress, then onus shifts on the AO to disprove the claim of the appellant that it has reduced the expenditure on capital account and inflated the expenditure on revenue account. In the instant case, it is seen that the AO has summari....

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....erthed at the terminal wider the hook and conveying the same through various equipment including conveyor belts at Essar Terminal and storing at appropriate place at open stockyard. During the FY 2009-10 the assessee handled cargo of 8.3 IMMT comprising of bulk material and finished goods. In order to carry out its cargo handling business the assessee bad contracted external parties and incurred manning expenses of Rs. 1,96,08,640 This amount has been debited to Profit and loss account. Similarly, in order to carry out the dredging activity required for construction of the project the assessee had incurred manning charges for crew amounting to Rs. 4,68,16,672/-. This amount has been debited to CWJP which is shown in the Balance Sheet. Accor....