TaxTMI 
TaxTMI 
2010 (7) TMI 1165
X X X X Extracts X X X X
X X X X Extracts X X X X
....to as 'the Act') vide his order dated 25-09-2006 for assessment year 2004-05. 2. The first issue in this appeal of Revenue is against the order of CIT(A) in deleting the addition of Rs. 17,83,410/- made by Assessing Officer on account of labour charges. For this, Revenue has raised the following ground No.1:- "1. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting addition of Rs. 17,83,410/- being labour charges paid to the proprietary concern of the director u/s.40A(2) of the Act, disregarding the fact that infrastructure was not available with the said proprietary concern." 3. The brief facts are that the assessee is engaged in the business of testing of metals, heat treatment of metals, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Therefore, it was decided to outsource this particular labour job work to Mangalam Engineers, so that not only delay in work is avoided but also specifications and standards are also met and proper services of testing metal sample can be rendered to customers in time and to their satisfaction. The AO has not considered the reply of the assessee as satisfactory and noted that assessee could have got the job work done directly from the open market instead of associate concern. He also noted that M/s. Mangalam Engineers received labour charges of Rs. 17.83 lakh as against the payment of labour charges at Rs. 12.71 lakh. Accordingly, he held the payments as unreasonable and excessive and disallowed the entire amount of Rs. 17,83,410/- u/s.40A(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amounting to Rs. 17,83,410/- , which is directed to be deleted." 4. After hearing the rival contentions and going through the facts of the case, we find that assessee from the very beginning making payments of labour charges, which were allowed. The assessee has filed complete details of labour charges yearwise, which reads as under:- F.Y. A.Y. Labour charges (Rs.) 1996-97 1997-98 5,20,835 1997-98 1998-00 11,32,330 1998-99 1999-00 12,45,680 1999-00 2000-01 13,00,870 2000-01 2001-02 12,58,725 2001-02 2002-03 11,04,690 2002-03 2003-04 14,64,055 2003-04 2004-05 17,83,410 We further find that assessee has filed complete details before Assessing Officer regarding labour paymen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the payment under this head. Accordingly, we are of the view that CIT(A) has rightly deleted the addition and we confirm the same and this issue of Revenue's appeal is dismissed. 5. The next issue in this appeal of Revenue is against the order of CIT(A) in deleting the estimated addition of Rs. 2.50 lakh made by Assessing Officer on account of depreciation. For this, Revenue has raised the following ground No.2:- "2. On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the estimated addition of Rs. 2,50,000/- on the depreciation, though the assessee failed to furnish the details of plant and machinery relatable to manufacturing activities." 6. At the outset Ld. SR-DR ,Shri Gaurav Batham stat....