TaxTMI 
TaxTMI 
2020 (1) TMI 954
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....incurred for the purpose of business Ld. CIT (A) ought to have deleted disallowance of genuine business expenses duly supported by documentary evidence. It be so held now. 3. Ld. CIT (A) erred in law and on facts in confirming disallowance of Rs. 4, 25, 000/- by AO out of total salary expenses claimed by the appellant. Ld. CIT (A) ought to have deleted disallowance appreciating the fact that salary to the staff recruited for timely completion of the project is incurred wholly and exclusively for the purpose of business. It be so held now. 4. CIT (A) erred in law and on facts in confirming disallowance by AO of supervision charges of Rs. 2, 22, 200/- (amount debited in Profit & Loss a/c Rs. 1,61, 600/-) paid for the purpose of construction work supervision. Ld. CIT (A) ought to have deleted disallowance of expenses incurred for the purpose of business. 5. Ld. CIT (A) erred in law and on facts in confirming addition by AO of Rs. 19, 40,000/- advance booking receipt by treating it as unexplained credits. Ld. CIT (A) ought to have deleted addition made by AO appreciating sale deed on record substantiating receipt of booking amount from the members that under no circumstances be t....
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....h labour expenses and added to the total income of the assessee. 6. Aggrieved assessee has filed appeal before the ld. CIT(A) on this issue and the ld. CIT(A) has partly allowed the appeal of the assessee by restricting the disallowance to 25% of the labour expenses as against disallowance 50% of labour expenses made by the assessing officer. 7. During the course of appellate proceedings before us, the ld. counsel has filed paper book comparing various detail and submission made before the assessing officer and ld. CIT(A) during the course of assessment and appellate proceedings. The ld. counsel has contended that disallowance of labour expenses is not correct as all the labour expenses were genuine and related to the business activity of the assessee. The ld. counsel has referred the copies of labour account pertaining to the labour expenses and other submission placed in the paper book. On the other hand, ld. departmental representative has supported the order of ld. CIT(A). 8. We have heard both the sides and perused the material on record. During the course of assessment, the assessing officer observed that assessee has not made proper quality of compliance during the course....
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....9% to 14.01% in the year, we consider it will be reasonable to restrict the disallowance to the extent of 12.5% to meet the end of justice for want of verification on account of not providing proper supporting bill/vouchers. Therefore, addition to the extent of Rs. 18,64,135/- is confirmed. This ground of appeal is partly allowed. Ground No. 3 (Disallowance of salary expenses of Rs. 4,25,000/-) 9. During the course of assessment, the assessing officer noticed that assessee has claimed salary expenses of Rs. 9,47,366/-. On verification, the assessing officer stated that assessee could not produce relevant evidences in support of claim of salary expenses to the amount of Rs. 4.25 lacs and the detail of such expenses reported in the assessment order were as under:- Party name Brief remark Shri BhikhabhaijivanbhaiChaudhary Ledger payment of Rs. 10,10,000/- ChaurdharyAmrutbhaiKodarbhai Ledger payment of Rs. 1,10,000/- Gaurang Patel Ledger payment of Rs. 1,61,600/- HardikAshwinbhai Patel Ledger payment of Rs. 80,000/- Kalpesh P Parikh Ledger payment of Rs. 60,000/- KiranbhaiBabubhaiChaudhary Ledger payment of Rs. 1,25,000/- Consequently, the assessing officer has....
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....rd. The assessing officer has treated Rs. 19,40,000/- as unexplained stating the identity and creditworthiness of the parties and the genuineness of the transaction were not proved.. The assessee has claimed that this amount was received from these persons on account of booking amount and produced copies of sale deed to establish genuineness of the transaction. In this regard, we have gone through the page no. 212, 273 of the paper book no. 2 wherein the assessee has placed the copies of the documents demonstrating that there was sale deed made with the aforesaid parties along with the identity and address of the parties from whom booking amount received. The assessing officer has not made any inquiry/verification from the aforesaid parties to contradict the claim of the assessee that amount was received as booking amount. In the light of the above facts and circumstances, we consider that decision of ld. CIT(A) is not justified. Therefore, this ground of appeal of the assessee is allowed. Ground No. 6 (Disallowance of Rs. 4,12,500 on account of unexplained expenditure) 18. During the course of assessment, the assessing officer noticed that assessee has claimed payment of Rs. 4,....
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.... was arsied on account of grouping change in account. Therefore, we do not find any reason to interfere in the finding of ld. CIT(A). Accordingly, this ground of appeal of the assessee is dismissed. Ground No. 8 (Disallowance of Rs. 7,50,375/- as remuneration paid to partner Dashrathbhai S. Chaudhary, HUF) 24. At the time of assessment, the assessing officer noticed that assessee has claimed a sum of Rs. 7,50,735/- as remuneration paid to M/s. Dashrathbhai S. Chaudhary, HUF during financial year 2011-12. The assessing officer was of the view that as per explanation 4 to section 40(b) only working partner who is also an individual is entitled to remuneration and a partner acting in a representative capacity cannot claim deduction. Therefore, the claim of remuneration payment was disallowed. 25. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee reiterating the reason stated by the assessing officer. 26. During the course of appellate proceedings before us, the ld. counsel has contended that ld. CIT(A) is not justified in disallowing the remuneration paid to partner who was working in the firm in the HUF capacity. In....
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....olation of section 40(b). The issue of allowability or otherwise of remuneration stops at that point. In this regard for the benefit we may refer to the decision of the Tribunal in the case of Krishna Ceramics vs. ITO (supra) as referred to in ACIT vs. Giriraj Mines 001 SOT 0279 (Ahd) (supra) as under: "On a reading of this clause it is clear that the remuneration was paid to the partners for attending to the affairs of business- of the partnership firm as working partners. Therefore, the CIT(A) was not justified in holding that there was no evidence that they were working partners. In view of the Supreme Court decision in the case ofRashiklal and Co. 229 ITR 458 it is the individual who is partner in the firm and it is immaterial as to in what capacity he is the partner. His obligation may be towards others, but vis a vis the firm he is the partner in his individual capacity. Even otherwise, as held in the case of Kshetra Mohan Sannyasi Charan Sadhukhan vs. CEPT 4a Hindu undivided family is included in the expression 'person' as defined in the Indian Income-tax Act as well as in the Excess Profits Tax Act, hut it is not juristic person for all purposes. When two kartas o....