2018 (6) TMI 151

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.... after considering the submissions of ld. DR and the written submission filed by the assessee as well as the material available on record. 3. The Revenue has raised the following grounds of appeal :- 1. On the facts and in the circumstances of the case the Ld.CIT(A) was not justified in deleting the addition of Rs. 68,68,370/- shown under the head "retrenchment compensation and other benefits" as outstanding liability. 4. Brief facts of the case are that the assessee is a civil contractor and filed the return of income electronically for the assessment year 2010- 2011 on 31.03.2011 with total income of Rs. 30,80,120/- and the return of income was duly processed u/s.143(1) of the Act and the case was selected for scrutiny unde....

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.... two substantive grounds have been raised by the appellant, (a) against the addition^ of current liability of Rs. 68,68,370/- on account of worker's retrenchment compensation and other benefits and (b) against the passing of the order u/s!44 of the IT. Act. 3.1 As regards the first issue, the Assessing Officer has held that Rs. 68,68,370/- is a fixitious liability created by the appellant on account of retrenchment compensation and oilier benefits outstanding. The Assessing Officer has framed this view mainly on two counts (a) that the liability was outstanding at the year end and in the subsequent year only a sum of Rs. 32,91.117/- was paid, and (b) because as per Labour Law, retrenchment compensation is required to be paid on....

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....books of accounts were produced and test checked. But the A.O. although he basically discarded the accounts but keeping off the percentage basis he disallowed the total liability of retrenchment benefit of Rs. 68,68,370/- even performing several queries on that point and the order is in (he line of 143 (3) of the Act. In (his situation the appellant submits (hat being a labour contractor the increasing and reducing the load of workers is being done regularly according the work load with the main work. As per (he terms with (he. principal contractor L & T wherever (he service of the workers is retrenched he is entitled (o the benefits as prescribed in section 25 F of Industrial Dispute Act 1947. This syste....

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....11-12. The practical difficulty to defer the payment is due to non release of the retention money of Rs. 41,74,148/- by the principal contractor Larsen & Toubro Ltd. (A chart is enclosed showing the payment of retrenchment benefit of last 3 years and the money due from Larsen & Toubro Ltd.) The appellant files the chart showing the details of workers with their address and other particulars of the payment made in F/Y- 2010-11. towards part payment of retrenchment benefit. This chart is filed during the assessment proceedings. Now the appellant explain the obligation of payment of retrenchment benefit (or compensation). As per section 25 F of the Industrial Dispute. Act every retrenched worker is to be paid (i) One....

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.... the assessee. Therefore the framing of order is not as per practice or procedure. Alternately the appellant urge that the matter may be considered in this line and a relief may kindly be given It may not be out of place to submit that by adding the entire amount of retrenchment benefit of Rs. 68,68,370/- the net profit has gone to 13.76% which is impossible for a labour contractor. In a case where there is clear disclosure of the gross turnover then this absurd addition is beyond (he principle of equity. So the appellant earnestly pray that relief either of the situation as staled above may kindly be considered. 3.3 In addition to the above, the appellant showed ledger accounts and other documents J main....