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TMI Blog2012 (6) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- The disallowance u/s 40A(2)(b) can be made only to the extent the payment for the services is excessive or unreasonable vis-a-vis the market price of such services but what is essentially required is that the market price of these services is established and then amount paid in excess of such market price is to be disallowed - estimate of salary made by AO @ Rs. 5,000/- per month is without any basis and against the express provisions of Section 40A(2)(b) - disallowance of Rs. 60,000/- in this case will meet the ends of justice and thus, the assessee gets a relief of Rs. 1,25,000/- on this count - partly in favour of assessee. Addition under the head Disallowance u/s 43B - payment of bonus and leave with wages after filing of return - Held that:- Payment of liability covered u/s 43B are liable to be paid before the due date of filing of the return as prescribed u/s 139(1) and there is no relevance with regard to the date of filing of the income tax return - as the assessee paid the amount in question on 8.11.2007 i.e. before the due date of filing of return i.e. 15.11.2007, which was extended time for filing the return u/s 139(1) the addition are to be deleted - in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer, the assessee submitted that wages ratio has been increased from 3.01% to 3.23%. Fabrication charges increased from 1.65% to 2.33% resulting in increase of cost of production by 1.07%. However, it was pointed out by the assessee that the fabrication charges receipts were substantially reduced from Rs. 3,67,755/- to Rs. 5,675/-. This was stated by the main reason for fall in GP. Further, it was submitted by the assessee that by applying 50% GP ratio on Fabrication Charges the last year GP would be more by 1,84,000/- as compared to the current year. It was further submitted by the assessee that during the year under consideration, the fabrication was quite negligible i.e. why GP ratio during the year under consideration was on lower side as compared to the last year, calling for no adverse view. The Assessing Officer did not accept the explanation of the assessee on the ground that the assessee did not furnish any justification as to why fabrication charges have been reduced and no details have been submitted for increase in fabrication charges paid. However, the Assessing Officer in view of the provisions of section 145(3) of the Income Tax Act, 1961 (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n receipt of fabrication charges. In this regard, the Assessing Officer has observed as under:- "The submission of the AR of the assessee has been considered and after giving margin for more payment of fabrication expenses this year as compared to last year and that the receipts of fabrication work was far lesser than the last year, a very reasonable rate of GP of 14% is considered as most reasonable in this year" Considering the entire facts and circumstances of the case and also the submissions made by Shri Ashok Goyal, Ld. Counsel for the assessee, we are of the considered view, that the GP rate at 14% estimated by the Assessing Officer and confirmed by the CIT(A) is on higher side and, therefore, in the interest of justice, we reduce the same to 13%. The Assessing Officer is directed to re-compute the income of the assessee accordingly. This ground of the appeal is allowed partly. 8. Ground No.3 of the appeal reads as under:- 3. That the Ld. CIT(A)-II, Ludhiana has also erred in confirming the addition of Rs. 1,85,000/- under the head Disallowance u/s 40A(2)(b) of the Income Tax Act, 1961 without any base and reasons thereof. 9. While framing the assessment, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with wages amounting to Rs. 3,09,114/- after filing of return but before the due date of filing the return. The assessee paid the above amount on 8.11.2007 and the return of income was filed on 16.10.2007. The date of filing of the return us/ 139(1) of the Act for the year under consideration was extended to 25.11.2007. The Assessing Officer rejected the assessee's claim on the ground that the amount in question was paid after filing of the return. On appeal, the CIT(A) upheld the action of the Assessing Officer and hence the assessee is in appeal before the Tribunal. 13 . We have heard the rival submissions and have also perused the materials available on record. It is true that under the Income Tax Act, the payment of liability covered u/s 43B are liable to be paid before the due date of filing of the return as prescribed u/s 139(1) of the Act. There is no relevance with regard to the date of filing of the income tax return. Admittedly, the assessee paid the amount in question on 8.11.2007 i.e. before the due date of filing of return i.e. 15.11.2007, which was extended time for filing the return u/s 139(1) of the Act for the year under consideration. We, therefore, delete the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh order in accordance with law after affording due and reasonable opportunity of being heard to the assessee. The ground stands allowed for statistical purposes. 18. Ground No.6 of the appeal reads as under:- 6. That the Ld. CIT(A)-II, Ludhiana as also erred in confirming the addition of Rs. 31,799/- under the head "Disallowance of Telephone expenses" without any base and reasons thereof. 19. During the assessment year under consideration, the assessee claimed telephone expenses at Rs. 1,58,994/-. The Assessing Officer disallowed 1/5th of the expenses which comes to Rs. 31,799/- observing that the element of personal use of telephone by the assessee and family members cannot be ruled out. Further, no log book or details of use of telephone for business purposes was maintained by the assessee. On appeal, the CIT(A) upheld the disallowance made by the Assessing Officer. 20. We have heard the rival submissions and have also perused the materials available on record. Shri Ashok Goyal, Ld. Counsel for the assessee submitted that in the computation of income, the assessee himself has disallowed 1/10th out of telephone expenses which comes to Rs. 15,900/-. He, therefore, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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