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TMI Blog2013 (5) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case and in law the CIT(A) erred in directing the Assessing Officer (the AO) to recomputed the disallowance under section 14A of the Income-tax Act, 1961 (the Act). The appellant prays that the disallowance of Rs. 3,98,791/- under section 14A of the Act be deleted. Without prejudice, the Appellant submits that the disallowance in no case can exceed the amount of exempt income of Rs. 15,420/- (ACIT vs. Punjab State Coop and Mktg (ITAT Chandigarh)) 2. Briefly stated relevant facts of the case are that the Assessee is a Civil Contractor with the Municipal Corporation of Greater Mumbai (MCGM) and registered total over of Rs. 9,09,93,747/- and the total income of Rs. 37.8 lakhs (rounded off) during the year. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic exercise. Therefore, he has no objection with the said ground is dismissed as an academic. 4.1. We agree with the same and therefore, the ground no.2 with its sub grounds is dismissed with academic. Accordingly, ground 1 is dismissed as academic. 5. Ground No.1 relates to addition of Rs. 10,08,620/- on account of labour charges. In this regard, Ld. counsel mentioned that the AO made addition of Rs. 10,08,620/-, being 8% of the total expenses of Rs. 1,26,07,754/- claimed under the head labour charges expenses. Briefly stated relevant facts are that an amount of Rs.1,26,07,754/- was claimed in the Labour Charges Account and these amounts were paid to mukadams or supervisors for supply of manpower for labour works relating to his project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 8% on adhoc base and without any supporting material to strengthen such adoption. Further, he also mentioned that the Net Profit rate of 4.03% is reasonable in his line of business and relied on the NPs pertaining to the levy years which are 4.23% for AY 2005-06 and 5.75% for AY 2006-07 in the assessee's own case. However, the CIT(A) considered the said submissions of the assessee and rejected the same and finally confirmed the addition as per the discussion given in para 4.2 of the impugned order. CIT(A) commented that the drop of NP from 5.75% (for AY 2006-07) to 4.03% is unjustified by the assessee. 8. Aggrieved with the same, the Assessee filed present appeal before us. In this regard, Ld Counsel brought our attention to the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r book and mentioned that the NP vary from 5.75% to 4.03%. It indicates and supports the allegation of inflation expenses debited as Labour Charges Account. Further, the Ld. DR also observed suspicious fall of labour charges expenses by at least 50% in comparison to that of the claim in the same account in the earlier assessment years. He however has nothing to say about what is the basis for adopting 8% and why the same is adopted for making disallowance. 10. We heard both the parties and perused the orders of revenue and paper book filed before us. There is no dispute on facts. CIT(A) dissatisfied with the quality of the vouchers maintained and furnished to the AO in support of the Labour Charges Account. AO came to the conclusion that s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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