2018 (5) TMI 256

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.... determin - ing the income of the assessee at Rs. 42. 53 lakhs. 2. First ground of appeal is about disallowance of Rs. 21. 31 lakhs paid to R. R. Trading (RRT). During the assessment proceedings, the AO found that the assessee had debited Rs. 81. 54 lakhs under the head staff welfare expenses. He disallowed Rs. 21. 31 lakhs paid to RRT, Rs. 4. 14 lakhs paid to Suraj Novelties (SN) out of the above. The AO found that the bills for Rs. 23. 31 lakhs were raised in the name of Della Technicia and not in the names of the assessee. He held that the expenditure limned by the assessee was not allowable as the expenses belong to another entity. 2.1. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate A....

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....the assessee, that RRT in its letter dated 29/01/2013 has specifically mentioned that inadvertently bills belonging to the assessee were issued in the name of Della Technicia. We are unable to understand as to why the FAA discarded this evidence though the same was produced before him. He could have called for remand report or could have examined RRT in that regard. But, he simply confirmed the order of the AO. In our opinion the course adopted by the FAA is not as per the law. As a representative of the State, he is supposed to be an instrument in collecting due taxes and pass and adjudication order based on the evidences. As he has failed to do so, therefore, reversing his order we decide first ground of appeal in favour of the assessee. ....

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....l submissions. We find that there is no dispute about incurring of expenditure. The AO/FAA has not doubted genuineness of the expenditure. They have disallowed the expenditure holding that same was not incurred wholly and exclusively for the business of the assessee. We find that the AO, on the first phase of the assessment order, has specifically mentioned that assessee was engaged in constructing villas in remote area. Considering the above fact, in our opinion, expenditure incurred for purchasing television sets, refrigerators etc. cannot be disallowed. The necessity of the business is to be decided by the assessee itself and not by the AO. It is not the case of the revenue authorities that those items were used by the family of the dire....

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....ssee had paid labour charges to 13 parties, that it did not furnish any details about the tax deducted at source. He observed that out of the 13 parties it had furnished few bills of only three parties. After considering the details he held that labour charges payment were not hundred percent genuine. He disallowed 10% of the total labour charges debited in the books of accounts, amounting to Rs. 1, 51, 115/-. 5.1. Before the FAA, during the appellate proceedings, the assessee made submissions and stated that necessary details about each labour payment was made during the course of assessment proceedings. After considering the available material, he held that the assessee had not filed complete details about all the parties, that the AO ....