2012 (6) TMI 901

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....In the first Ground, the assessee is aggrieved by the action of the Commissioner of Income-tax (Appeals) in confirming the addition of Rs. 4,50,000/- out of a total disallowance of Rs. 7,84,256/- made on ad hoc basis out of expenses under three heads, namely, Khadi, Labour and Vehicle-fuel expenses. 3. The assessee is an individual engaged in the business of civil contracting. With regard to the expenditure on stone/khadi purchased, the Assessing Officer noticed that the expenditure claimed of Rs. 15,67,270/- was not fully supported by independent vouchers and he accordingly disallowed 10% of the same, i.e. Rs. 1,56,727/-. Likewise, with regard to labour expenditure of Rs. 1,08,52,069/-, it was found supported by self-made vouchers and a....

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....ccount the sudden abnormality in the expenses if any, vis-à-vis earlier years. In AY 2006- 07 assessed u/s 143(3) every nominal disallowances were made on account of labor and vehicle expenses. No disallowance was made on account of khadi expenses. Taking into consideration the nature of the business of the appellant and principle laid down in the above cited decisions, it would be appropriate and reasonable to restrict the disallowances to Rs. 4,50,000/- on account of these expense. Thus, an addition of Rs. 4,50,000/- is confirmed out of the total disallowance of Rs. 7,84,256/-. Appellant therefore gets a relief of Rs. 3,34,256/-. These ground are therefore partly allowed." 5. Against such partial relief, the assessee is in appea....

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....ganized sector. The Commissioner of Income-tax (Appeals) has also noticed that in the earlier assessment year 2006-07 in an assessment under section 143(3) of the Act, no such disallowance was made on account of khadi expenses. On the strength of the twin factors, in our view, there is little justification for sustaining any disallowance out of khadi expenses. Therefore, on this count, the expenses as claimed by the assessee are to be allowed in full. In so far as the disallowances out of labour charges and vehicle fuel expenses are concerned, the Assessing Officer noticed that in the assessment year 2006-07 very nominal disallowances were made on account of such expenses. In our considered opinion, having regard to the aforesaid, it would ....