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TMI Blog2013 (10) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... icer out of the wages expenses in both the years, which were partially deleted by the Ld. CIT(A). 3. While the revenue is assailing the decision of the Ld. CIT(A), in granting partial relief, the assessee is assailing the decision of the Ld. CIT(A), sustaining the additions partially. 4. The facts relating to the issue are stated in brief. The assessee is engaged in the business of manufacture, purchase, sale and export of handloom cloth. During the course of assessment proceedings relating to the assessment year 2007-08, the Assessing Officer examined the debtors account and noticed there was difference in the account balance between the assessee and a debtor M/s. Kamala, Chennai. The said debtor had also transactions with the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the letters were returned un-served and the persons who responded stated that they did not maintain any books of account. Hence the Assessing Officer took the view that it was not possible to verify the wages in the absence of supporting details. Accordingly, the Assessing Officer took the view that the assessee has exaggerated the claim of wages in both the years. By considering the ratio of wages with the value of yarn consumed in the past years, the AO held that the it would be reasonable to estimate the wages at 65% of the value of yarn consumed. Accordingly, the Assessing Officer estimated the excess wages claimed by the assessee at Rs.30.00 lakhs for the assessment year 2006-07 and at Rs.50.00 lakhs for the assessment year 2007-08 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding year. Aggrieved by the orders of the Ld. CIT(A) , both the parties have filed these appeals before us. 7. The Ld. DR submitted that the Ld. CIT(A) has reduced the disallowance without bringing any material on record and accordingly, prayed for sustaining the disallowances made by the Assessing Officer. On the contrary, the Ld. AR submitted that the assessee is an exporter of handloom cloth and hence, he has to depend upon weavers who usually own one or two looms to get the cloth manufactured. The assessee issues yarn to them and on receipt of cloth, the assessee determines the wages payable to them and make the payment on weekly basis. He submitted that the AO was not right in making observation that the assessee did not maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. Under these circumstances, there is justification in disallowing a part of wages claim, so that such disallowance shall take care of inflation or infirmities, if any, in the said claim. 9. We notice that the Ld CIT(A) has restricted the disallowance to 50% of the disallowance in assessment year 2006-07 and 25% of the disallowance in assessment year 2007-08. In our view, a uniform disallowance of 25% of the amount disallowed by the AO in both the years would meet the ends of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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