9911796707
TMI Blog2013 (10) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... m to the value of yarn consumed in order to determine the reasonableness of the claim. However, it is not be a scientific method to ascertain the reasonableness. While the wages are normally fixed on the basis of inflation index, the rate of yarn would depend upon market forces, quality and variety of yarn etc - At the same time, the assessee has also failed to substantiate the wages claim by furnishing the quantity details - There is justification in disallowing a part of wages claim, so that such disallowance shall take care of inflation or infirmities - Uniform disallowance of 25% of the amount disallowed by the AO in both the years would meet the ends of justice, in all the Assessment years under consideration. - Decided against the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opened the assessment relating to the assessment year 2006-07 by issuing notice u/s 148 of the Act. 5. While completing the assessment for both the years, the Assessing Officer noticed that the assessee did not maintain registers supporting the wage payments. The assessee used to purchase yarn and give them to various weavers for manufacturing cloth as per his directions. In the assessment year 2006-07, the assessee had claimed wages expenses to the tune of Rs. 1.90 crores and at the year end, the assessee had shown a sum of Rs. 27,36,561/- as weaving wages payable in the sundry creditors account as at the year end. 6. In the year relevant to the assessment year 2007-08, the assessee had claimed wages expenses to the tune of Rs. 1.80 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s before the Ld. CIT(A) by filing the appeals before him. The Ld. CIT(A) held that the methodology adopted by the Assessing Officer to compare the amount of wages with the value of yarn consumed as unscientific, since the composition of yarn and wages in a manufacturing process varies with the type and quality of cloth manufactured. The Ld. CIT(A) also noticed that the Assessing Officer has himself admitted that the weavers are persons of no means and further they were having only one or two looms. Hence, the Ld. CIT(A) opined that such kind of weavers cannot be expected to maintain books of account. Accordingly, the Ld. CIT(A) held that it is not fair to punish the assessee for the failure on the part of the small weavers in not maintainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the assessee. The Ld. AR submitted that it is not scientific to compare the wage payments with the value of yarn consumed as the value of yarn would depend upon the quality of yarn. Though the Ld. CIT(A) has accepted that it is not scientific to compare the wage payments with the value of yarn, yet he has sustained a part of disallowance without any basis. Accordingly, he prayed for the deletion of entire addition made by the Assessing Officer. 8. We have heard the rival contentions and carefully perused the record. Though the Ld A.R claims that the wages are paid on the basis of quantity of cloth manufactured by the weavers, yet the fact remains that the assessee did not furnish any quantity details to substantiate the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
