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2015 (6) TMI 287 - AT - Income TaxAddition on account of Mobilization advance - CIT(A) deleted the addition - Held that - As relying on assessee s own case 2011 (11) TMI 506 - Gujarat High Court the advance received by the assessee against the purchase of material at site before the execution of work, the same cannot be treated as income of the assessee, especially when the assessee is following the practice of showing advance receipts from the parties in the balance-sheet and when the work is executed, it is shown as receipt and offered for tax. - Decided in favour of assessee. Addition on account of Director s remuneration - CIT(A) deleted the addition - Held that - It is not controverted by the Revenue that in the immediately preceding years, i.e. AYs 2004-05 & 2006-07 the claim of the assessee in respect of the remuneration of Directors claim was allowed in the scrutiny assessment passed u/s.143(3) of the Act. Since the Revenue has not placed any material on record suggesting that any change into the facts and circumstances in the year under appeal, therefore we do not see no reason to interfere in the order of the ld.CIT(A).- Decided in favour of assessee. Addition on account of cessation of liability - CIT(A) deleted the addition - Held that - Ss relying on CIT vs. Nitin S.Garg 2012 (5) TMI 30 - Gujarat High Court wherein held that ITAT is justified in taking the view that as assessee had continued to show the admitted amounts as liabilities in its balance sheet the same cannot be treated as assessment of liabilities - merely because the liabilities are outstanding for last many years, it cannot be inferred that the said liabilities have seized to exist it is on part of AO to prove that the assessee has obtained the benefits in respect of such trading liabilities by way of remission or cessation which he fails to do - in the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable - Decided in favour of assessee. Disallowance of labour charges - Held that - is evident from the order of ld.CIT(A) that he declined to accept the evidences on the basis that no formal request has been made. The contention of the assessee had been throughout both before the AO and the ld.CIT(A) that the assessee made payment to labour contractors, such payment was made for the purpose of business. We are unable to uphold the view of ld.CIT(A) since there is no dispute with regard to the fact that the assessee has carried out certain work. In this process, he employed labour contractors. No further inquiry is made by the authorities below for finding out the genuineness of claim of the assessee. In our considered view, the assessee ought to have given chance to prove the genuineness of expenditure since it is not the case where the assessee has not carried out work at all. Therefore, to find out the quantum and nature of work executed and for carrying out such work, if any, the expenditure incurred on such work, inquiry is to be made by the Revenue. AO is hereby directed to make further inquiries in respect of claim of the assessee from the persons to whom the assessee made payments towards labour expenses - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Deletion of addition on account of mobilization advance. 2. Deletion of addition on account of Director's remuneration. 3. Deletion of addition on account of cessation of liability. 4. Disallowance of labor charges. 5. Disallowance of Director's remuneration under section 40A(2). 6. Addition on account of retention money. Detailed Analysis: 1. Deletion of Addition on Account of Mobilization Advance: The Revenue's appeal contested the deletion of Rs. 73,61,294/- added as mobilization advance. The CIT(A) deleted the addition based on a precedent set in AY 1995-96, where it was held that advances received against the purchase of materials before work execution could not be treated as income. The Tribunal upheld this view, referencing a Gujarat High Court judgment affirming the same principle. The Tribunal found no reason to interfere with the CIT(A)'s order, thereby rejecting the Revenue's ground. 2. Deletion of Addition on Account of Director's Remuneration: The Revenue challenged the deletion of Rs. 13,20,000/- disallowed as Director's remuneration. The CIT(A) partly allowed the appeal, sustaining disallowance to the extent of Rs. 3.4 lakhs. The Tribunal noted that the AO did not provide a definite finding on the unreasonableness of the expenditure under section 40A(2). The CIT(A) had allowed the remuneration as it was consistent with previous years' assessments. The Tribunal upheld the CIT(A)'s decision, rejecting the Revenue's ground. 3. Deletion of Addition on Account of Cessation of Liability: The Revenue appealed against the deletion of Rs. 16,06,500/- added as cessation of liability. The CIT(A) deleted the addition, noting that the liability was a disputed advance receipt pending adjudication in court. The Tribunal referenced the Gujarat High Court's judgment in CIT vs. Nitin S. Garg, which held that merely because liabilities are outstanding for many years, it cannot be inferred that they have ceased to exist. The Tribunal upheld the CIT(A)'s order, rejecting the Revenue's ground. 4. Disallowance of Labor Charges: In the assessee's appeal for AY 2008-09, the disallowance of Rs. 80,59,275/- as labor charges was contested. The CIT(A) confirmed the disallowance, citing the lack of cogent evidence to prove the genuineness of the expenses. The Tribunal found that the assessee should be given a chance to prove the genuineness of the expenditure and directed the AO to make further inquiries. The ground was allowed for statistical purposes. 5. Disallowance of Director's Remuneration under Section 40A(2): The assessee contested the disallowance of Rs. 15,48,000/- and Rs. 13,20,000/- for AY 2008-09 and 2009-10, respectively. The Tribunal noted that the issue had been consistently decided in favor of the assessee in previous years. No change in facts and circumstances was pointed out, and thus, the Tribunal dismissed the grounds for both years. 6. Addition on Account of Retention Money: The Revenue's appeal for AY 2009-10 contested the deletion of Rs. 85,50,913/- added as retention money. The CIT(A) deleted the addition based on a precedent set in the assessee's own case for AY 1995-96 and a Gujarat High Court judgment. The Tribunal found the issue covered in favor of the assessee by the High Court's judgment and dismissed the Revenue's ground. Conclusion: - Revenue's appeal No.923/Ahd/2011 for AY 2007-08 is dismissed. - Assessee's CO No.101/Ahd/2011 for AY 2007-08 is dismissed. - Assessee's appeal No.1387/Ahd/2012 for AY 2008-09 is partly allowed for statistical purposes. - Assessee's appeal No.2126/Ahd/2012 for AY 2009-10 is dismissed. - Revenue's appeal No.2497/Ahd/2012 for AY 2009-10 is dismissed.
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