TaxTMI 
TaxTMI 
2018 (2) TMI 742
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.... such expenditure on account of supervision charges was incurred by the assessee in the earlier years, the A.O. required the assessee to furnish the relevant details in order to justify its claim for deduction on account of supervision charges. The assessee was also called upon by the A.O. to furnish the details of past experience of the supervisors, their technical qualification and Permanent Account Numbers. In reply, it was explained by the assessee that due to complaints of quality from customers, the pre-delivery inspection was made compulsory. It was also explained by the assessee that the contractors were appointed for this purpose and they were entrusted the job to ensure delivery as per order, get the quality certificates from the customers and help the customers in end use of the products. It is submitted by the assessee that the contractors so appointed did the required work through the skilled and unskilled staff appointed by them. It was submitted that the expenditure on supervision charges thus was incurred for providing services to the customers which had resulted in increase volume of business. This explanation of the assessee was not found acceptable by the A.O. an....
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....ssessee. 4. Installation of wire ropes at the site of the buyer involves strict supervision. Hence these supervisors were placed at buyer's premises. 5. No adverse inference should be drawn if two contractors had the same address. 4. During the course of appellate proceedings before the Ld. CIT(A), additional evidence was also filed by the assessee in the form of copies of purchase orders of the clients, guarantee certificates issued by Usha Martin, documents relating to dealer policy etc. The said documents filed by the assessee were forwarded by the Ld. CIT(A) to the A.O. seeking his comments. In the remand report submitted to the Ld. CIT(A) on 31.05.2016, the Assessing Officer offered his comments on the issue as under: "1. A.O. pointed out that the appeal proceedings assessee had submitted that supervisors work for groupings, fixing the loops at the ends at the sites as per testing requirements of the buyers to BSS/621 standards with the technically trained staff of the contractors; whereas in written submission dated 03.09.2015 before A.O. it was mentioned that supervision charges are paid to supervise the installation of wire ropes as per specifi....
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.... 10. Assessee did not produce TDS details for payments made to contractors." 5. When the remand submitted by the A.O. was confronted by the Ld. CIT(A) to the assessee, the later filed copies of acknowledgement of income tax returns filed by four contractors along with their Form 26AS. The assessee also offered following comments on the remand report submitted by the A.O.: "1. Assessee has given jobs of supervision to contractors and the manpower supplied by them is solely in their control and pay roll. Assessing technical skill of the persons deputed by the contractors is not an issue in appeal. Rather the genuineness of payments made and their business weeds is relevant issue. 2. Assessee has made the payments and if the contractors do not account for these payments, their AOs may be informed about it. 3. Payments made on the same day do not in any way make these payments bogus." 6. After considering the entire material available on record including the additional evidence filed by the assessee, the remand report submitted by the A.O. as well as the comments offered by the assessee on the said remand report, the Ld. CIT(A) decided the issu....
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....y one income receipt is there and i.e. from the assessee company. Sri Raman Das has also claim TDS credit of Rs. 14,000/- in the return of income. Thus only one contractor Sh. Raman Das is showing the receipts from the assessee company. All other contractors have not accounted for the payments made by the assessee company. A note worthy feature of print out of Form 26A5 is that the entries in Form 26AS appear when the deductor uploads the TDS returns. Secondly, the print out of these Form 26A3 have been taken as on 13th July, 2016. Hence the contractors who are not showing any receipt from assessee, have definitely not received any money. Other wise assessee would have uploaded the details in Form 26A5. Other set of assesses in whose case receipts appear in Form 26A5 but these are not shown in Return of Income, possibility is that assessee has uploaded the details in their Form 26AS without their knowledge and after filing of their return. In the case of Sri Raman Das, receipts appear in Form 26AS and are also reflected in his Return but considering overall situation, this also appears manipulated because total income is below taxable limit and entire TDS has been claimed ....
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....aking disallowance on account of supervision charges. He, therefore, strongly supported the impugned order of the Ld. CIT(A) confirming the disallowance made by the A.O. on account of supervision charges and urged that the same deserves to be upheld. 9. I have considered the rival submissions and also perused the relevant material available on record. As rightly contended by the learned DR, having claimed expenditure on account of supervision charges, the onus was on the assessee to establish on evidence that the said expenditure was incurred wholly and exclusively for the purpose of its business. In this regard, it is observed that no agreement or contract entered into with the concerned parties is produced by the assessee on record to show the nature of services agreed to be rendered by the concerned parties and the terms and conditions on which such services were to be rendered. The assessee has also not produced any evidence to show that the services were actually rendered by the said parties for the purpose of the assessee's business. As pointed out by the A.O. in the remand report as well as by the Ld. CIT(A) in his impugned order, there were discrepancies and deficiencies....