TaxTMI 
TaxTMI 
2016 (12) TMI 1803
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....-2008. The assessee was engaged in the business of mechanical and engineering job work. During the course of assessment proceedings, the assessing officer noticed that assessee had claimed site expenses of Rs. 5,68,37,507/- which also included contract labour and wages expenses. The assessing officer pointed out that out of these site expenses, the assessee had made payment of Rs. 3,11,02,820/- towards labour charges including fixed salary. The assessing officer stated that average salary paid to employees (hired contract labourers) was Rs. 400/- per day and Rs. 750/- per day respectively. The assessing officer stated that the total wage expenses claimed during the year was to the amounts of Rs. 3,11,02820/- out of which Rs. 11,221260/- paid to permanent employees and the balance Rs. 2,99,80,560/- paid towards wages. The assessing officer stated that 60% of the wages in the category of daily payment of Rs. 470 to Rs. 750/- amounting to Rs. 1,79,88,336/- was excessive on the reasoning that it was not possible of having this percentage of skilled workers, therefore, the assessing officer disallowed 20% of the salary in this category to the amount of Rs. 35,97,667/- and added to the t....
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....isallowed 20% of the wage payment of out of Rs. 1,79,88,336/- as excessive without supporting material and evidences to prove that the payment made to skilled workers was excessive. The assessing officer has not disproved the supporting vouchers and registers maintained by the assessee and other related supporting record maintained like provident fund and ESI contributions indicating the genuineness of these expenses. The observation made by the assessing officer about excessive wage payment was of general nature ignoring the fact that wages were paid on the basis of number of working days. The assessing officer had not considered the fact that the nature of the business of the assessee relate to job work of mechanical and engineering on contract basis with organization like refineries, petrochemicals such as IPCL IOCL Gail. Some of the jobs were of highly labor intensive involving skilled and experienced physical labour force at the site of the work. In view of the above stated facts and circumstances, we considered that assessing officer is not justified in making disallowance of Rs. 35,97,667/- without any supporting material and evidence, therefore, we uphold the decision of th....
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....n respect of hiring of 3 hydraulic machines from M/s Upendra Prasad Singh Hi Tech Construction Pvt. Ltd. was Rs. 15,000/- only. The fact that the IOCL has made payment to the appellant at such a high rate points to the fact that local rates of hiring were high. It also points out to the reasonableness of payments made by the appellant. Incurring a loss on a part of the contract should not be viewed adversely unless there are other reasons also. The party to whom payments have been made is not a related party and thereis nothing on record to show that a part of the payment has been received back by the appellant. Considering all these facts, I am of the opinion that the disallowance of Rs. 20,00,000/- made by the AO in respect of payments made to M/s Upendra Prasad Singh Hi Tech Construction Pvt. Ltd. is not justified and the same is hereby deleted." 9. During the course of appellate proceedings before us, the Ld. D.R. relied on the order of the assessing officer. On the other hand, Ld. A.R. relied on the order of Ld. Commissioner of Income Tax(A). He also furnished paper book containing the details pertaining to written submission made to Commissioner of Income Tax(A), return of ....
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....o the fact that the service tax was not debited to the P & L account and therefore, ratio of decision of Delhi High Court in the case of CIT v/s Noble and Hewitt India Ltd. is applicable to the facts of the appellant, disallowance of Rs. 3,81,229/-made by the AO is hereby deleted." 12. During the course of appellate proceedings before us, the Ld. D.R. relied on the order of the assessing officer. On the other hand, Ld. A.R. relied on the order of Ld. Commissioner of Income Tax(A). He also furnished paper book containing the details pertaining to written submission made to Commissioner of Income Tax(A), service tax details. 13. We have perused the submission of both the sides and find that the assessing officer had disallowed u/s. 43B of the act of Rs. 3,81,229/- as service tax payable.In this connection we noticed that out of total service tax liability of Rs. 22,07,221/- only amount of Rs. 18,25,992/- service tax was paid on 5th July, 2008 and there was remark in the audit report that the sum for Rs. 3,81,229/- service tax was not due and hence not paid. We considered that there was no liability of the assessee to pay the above referred service tax as on 31-03-2008 and this se....