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TMI Blog2015 (12) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of the assessee. Addition on account of shortage in production - Held that:- As decided in Commissioner of Income Tax, Faridabad vs. M/s Ram Gopal & Sons [2015 (8) TMI 177 - PUNJAB & HARYANA HIGH COURT ] the Assessing Officer made an addition to the assessee's income having rejected the assessee's case that there was a shortage in production. The CIT(A) found, as a matter of fact, that the assessee had been maintaining the complete details/particulars of opening stock, purchase, consumption, production and sales, which were in fact verified and accepted by the Assessing Officer. The finding is that the addition was made purely on imagination and assumptions without bringing any documentary material on record. The finding is neither absurd nor perverse. - Decided in favour of the assessee. TDS u/s 194C - Disallowance under section 40(a)(ia) - Held that:- The assessee has made payments to the three transporters mentioned in the assessment order for each order of transport executed by them. The assessee has no contract for transport with any transporter. Thus each GR Note becomes a separate contract and since the value of such contract does not exceed ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28/- on account of labour charges; ii) Addition of ₹ 20,97,572/- on account of shortage in production; iii) Disallowance of ₹ 8,59,481/- under section 40(a)(ia); The assessee had claimed labour charges of ₹ 3,71,208/- and ₹ 27,69,108/- on account of packing labour charges under the head consumption of goods. The Assessing Officer mentioned instances of two manufacturers of mehandi in Faridabad viz. M/s Kuriya Mal Sons, Faridabad and M/s Ishar Dass Amir Chand, Faridabad claiming labour charges at 1.13% and 1.52% respectively. The Assessing Officer was of the opinion that the assessee had inflated the labour charges just to reduce its taxable income. The Assessing Officer thus allowed labour charges to the assessee on the basis of the same as claimed by the other two leading manufacturers of mehandi by adopting the figure of 1.52% i.e. the higher of the two figures, as allowable expenses. Thus, the Assessing Officer disallowed a sum of ₹ 13,04,528/- by taking the figure of 1.52% of the gross turnover of the assessee out of the total expenditure of ₹ 31,40,316/- claimed by it under these heads. On appeal, the CIT(A) relying upon the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue. 4. Learned counsel for the parties are agreed that question No.(i) is covered by the decision of this Court dated 29.7.2015 in ITA No. 215 of 2014 (Commissioner of Income Tax, Faridabad vs. M/s Ram Gopal Sons) , in favour of the assessee and against the revenue, wherein it was recorded as under:- The first question also does not arise as a substantial question of law. The assessee claimed deduction in respect of labour charges paid to about 50 labourers. The Assessing Officer reduced this amount having come to the conclusion that only a few labourers were traceable at the given addresses and some of the addresses were not even confirmed. The Tribunal kept in mind the ground realities in such cases.There were comparable results in expenses of labour charges in earlier years. The deductions were allowed to the assessee. The quantum of expenditure can be compared to the production done by the labour. The labour was engaged on piece rate bases. It was found that there was a co-relation between the production as well as the number of labour engaged. The issue really is a question of fact and appreciation of facts. We are unable to say that this analysis and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can each GR be said to be a separate contract even though payments for several GRs are made under one bill? Answer: Normally, each GR can be said to be a separate contract, if the goods are transported at one time. But if the goods are transported continuously in pursuance of a contract for a specific period or quantity, each GR will not be a separate contract and all GRs relating to that period or quantity will be aggregated for the purpose of the TDS. It is not the case of the Assessing Officer that each GR is above ₹ 20,000/- and thus the assessee was required to deduct tax at source. This is a legal ground which can be taken up at any point of time in the appropriate proceedings. 3.2 The Assessing Officer has not brought on record any document to show that the assessee had a contract with any transporter and thus just because the payments exceeded ₹ 50,000/- there was no implicit reason to hold that the payments were made in pursuance to a contract. You are requested to delete the disallowance. 13. I have carefully considered the submissions of the learned AR and tend to agree with them. The facts of the case are clearly established by the learned AR as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the AO that each GR is above ₹ 20,000/- and thus the assessee was not required to deduct tax at source. This is a legal ground which can be taken up at any point in time in the appellate proceedings. It was further submitted that the AO has not brought on record any document to show that the assessee had contract with any transporter and thus just because the payments exceeded ₹ 50,000/- there was no implicit reason to hold that the payments were made in pursuance to a contract. 17. Considering the above, the learned CIT(A) held that the claim of the assessee was justified and correct in light of the aforesaid Board Circular No.715 dated 8.8.1995. Hence he held that the disallowance made by the AO is premature and without any solid finding or evidence. Hence the disallowance of ₹ 8,59,481/- stands deleted. 18. Against the above order, the Revenue is in appeal before us. 19. We have heard the rival contentions in the light of the material produced and precedents relied upon. We find considerable cogency in the submissions of the assessee. Furthermore,the Board Circular No.715 as aforesaid comes to the rescue of the assessee. Under the circumstanc ..... 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