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TMI Blog2010 (1) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... tside labour i.e. two job workers viz. Shri Mukeshbhai and Shri Sureshbhai. As regards own labour, the AO observed that the wages register for the month of February, 2006 and March, 2006 were signed by the labourers but did not contain the dates thereof. The AO further observed that the assessee did not have any preliminary record for working out the wages paid to the labourers. It was also observed by the AO that the per piece labour paid by the assessee was ₹ 19,04 as compared to ₹ 18.85 and ₹ 17.55 paid by his job workers viz. Shri Mukeshbhai and Shri Sureshbhai, respectively. As regards jobwork charges paid to contractors the AO observed that the bills were prepared by the assessee himself and on monthly basis however, the AO has not made any disallowance out of the labour charges paid by the assessee to the job workers. Thus, on the basis of comparison of the per piece wage rate paid by the assessee and his job workers, the AO framed an opinion that the wages paid by the assessee to his own labour were excessive and accordingly, the AO made an ad-hoc disallowance of ₹ 10,22,043/- being 10% wages of ₹ 1,02,20,430/-. 4 The assessee filed an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see pleaded that the ad-hoc disallowance as made by the AO on the allegation that the wages paid are excessive, is erroneous and hence, the same needs to be deleted. Before the CIT(A), the assessee also relied on the direct decision of the Ahmedabad Bench of ITAT in the case of Dhirubhai Becharbhai Dhamelia in ITA No.3188/Ahd/2007, wherein the ITAT has deleted the disallowance made out of labour expenses, by following its own decision in the cases of (i) Pravinbhai R Shah (HUF) ITA No.2336/Ahd/2004, (ii) Bharatkumar Ramniklal Mehta ITA No.1296/Ahd/2004 and (iii) Anish B Shah (HUF) ITA No.2223/Ahd/2004. 5 After considering the above submissions made by the assessee, the CIT(A) deleted the ad-hoc disallowance by observing as under:- "I have considered the facts of the case, the view taken by the ITO and the submissions of the appellant. It is observed that the ITO has not rejected the books of accounts but has made the impugned disallowance mainly on the basis of the allegation that the wage rate per piece paid by the appellant was higher than that paid by his contractors and that the wages register was signed but did not contain the dates thereof and further, the appellant did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2% GP in comparison to 3.50% which has been accepted by the department in the earlier year. After considering the overall position of the comparative gross profits, we are of the view that no addition is warranted." …. Considering all the facts and circumstances of the case and the Tribunals orders in favour of the assessee, we delete the disallowance of ₹ 10,81,172/ confirmed by the CIT(A)." In the present case, as already discussed herein before, the GP as also the NP of the appellant have increased to 3.82% and 1.82% respectively in the current year, as compared to 2.91% and 1.58% respectively in the earlier year. Further, the labour charges as a percentage of turnover have also decreased to 87.87% in the current year as compared to 92.14% in the earlier and moreover, the wages in percentage terms are at par with that paid by the job workers. Therefore, in view of these facts and by most respectfully following the decisions of the jurisdictional ITAT in the cases of (i) Pravinbhai R Shah (HUF) ITA No.2336/Ahd/2004, (ii) Bharatkumar Ramniklal Mehta ITA No.1296/Ahd/2004, (iii) Anish B Shah (HUF) ITA No.2223/Ahd/2004 and (iv) Dhirubhai Becharbhai Dhemelia in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the ad-hoc disallowance by observing as under:- "During the course of appellate proceedings, the appellant submitted that his factory is located at a remote place at Village Areth, Tal. Mandvi, Dist. Surat and not in the city of Surat and hence, the power supply being not consistently available at the remote place, the appellant had to run its factory on generator by consuming diesel, which increases the cost of power and fuel, as compared to the other 2 cases who are having their factory in Surat and have the facility of consistent electric power supply, which costs low as compared to diesel. Further, as regards the learned ITO's observation that the diesel bills are obtained from different pumps of different villages and that they do not bear any name, it was submitted that as matter of accepted trade practice, the person filling the petrol / diesel at any pump, who issues the bills only fills up the date, no. of litres and the amount, but never the name of the buyer and hence, on this ground the bills cannot be said to be non-genuine. Further, it was explained that since the appellant's factory is at Village Areth, Tal Mandvi, the purchase bills are of pumps of nearby villag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, not only the GP and NP of the appellant have increased to 3.82% and 1.82% respectively in the earlier year, but most importantly, even the power and fuel cost in percentage terms has decreased to 12.27% in the current year as compared to 17.29% in the earlier year. Thus, on considering these facts and most respectfully following the decision of the jurisdictional ITAT in the case of Bharatkumar Ramniklal Mehta (supra), I hereby delete the ad-hoc disallowance of 50% amounting to ₹ 8,13,269/- as made by the ITO out of diesel expenses. Thus, this ground of appeal stands allowed." 8 We have heard the learned DR and perused the material on record. We have also gone through the orders of the authorities below. We find that the CIT(A) has rightly observed that the ITO has not been able to prove that the power and fuel expenses is bogus being not supported by any authentic or genuine bill but he has only pointed out that the said bill does not bear the name of the assessee. The CIT(A) has also correctly observed that the petrol / diesel bills generally do not contain the name of the buyer and if the ITO had any doubt as regards the genuineness of the said expenses, he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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