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TMI Blog2011 (4) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2004-05 read as under:- 1. That the learned CIT[A] erred in law and facts of the case and confirmed the disallowance made by Assessing Officer at ₹ 400000/- out of construction expenses only on estimation/ adhoc and without any basis. The disallowance made therefore is totally wrong and illegal on the facts of the case. 2. That the learned CIT[A] erred in law and facts of the case and confirmed the disallowance made by Assessing Officer at ₹ 100000/- out of Repairs & Maintenance expenses of Machinery only on estimation /adhoc and without any basis. The disallowance made therefore is totally wrong and illegal on the facts of the case. 3. That the learned CIT[A] erred in law and facts of the case and confirmed the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. 8. That the learned CIT[A] erred in law and facts of the case and confirmed the disallowance made by Assessing Officer at ₹ 40000/- out of Staff Welfare expenses only on estimation/ adhoc and without any basis. The disallowance made therefore is totally wrong and illegal on the facts of the case. 9. That the learned CIT[A] erred in law and facts of the case and confirmed the disallowance made by Assessing Officer at ₹ 25000/- out of Camp Colony Exp. only on estimation/ adhoc and without any basis. The disallowance made therefore is totally wrong and illegal on the facts of the case. 10.That the learned CIT[A] erred in law and facts of the case and confirmed the disallowance made by Assessing Officer at ₹ 25000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] erred in law and facts of. the case and made the enhancement of relief claimed and allowed by Assessing Officer towards infrastructure project U/s 80-IA of the Act. The action of the learned CIT[A] is totally wrong and illegal on the facts of the case. 3. Rival contentions have been heard and records perused. 4. The facts, in brief, are that the assessee is a Company engaged in construction activities of civil work for and on behalf of various Government Departments. In the course of scrutiny assessment for the year 2004-05, the AO found that the assessee had debited construction expenses of ₹ 5.43 crores in its profit and loss account, which are mainly payment to labourers on account of construction work, drilling and grouting, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed claim of deduction u/s 80IA. As against the above order of CIT(A), the assessee is in further appeal before us. 6. We have considered the rival contentions, carefully gone through the orders of the authorities below and found from record that only reason given by the Assessing Officer for disallowance was that huge expenditure has been incurred and the disallowance was made on ad hoc basis without pointing out any of the expenses, which are not related to business or which is excessive or unreasonable expenses not supported by proper bills and vouchers. We found that even during the course of scrutiny proceedings, the assessee has furnished full details of expenses and also produced books of account and vouchers, which were verified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to valuation arrived at in respect of work in progress, which, keeping into view the nature of assessee's business being civil construction, the exact determination of which is very difficult the AO was not justified in rejecting books of account without pin pointing any other defects therein. It is also not a case of AO that assessee had reduced its net profit rate during the year under consideration as compared to profit rate shown in the preceding years. However, at the very same time, we found that in the subsequent year, the assessee had shown net profit of 4.66 %. Keeping into view the totality of facts and circumstances and the fact that defect pointed out by the Assessing Officer was not material, we direct the AO to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of such shares as business income in place of short term capital gains offered by the assessee.
14. Ground raised with regard to disallowance of 80I deduction was not pressed by the ld. Authorized Representative. The same is, therefore, dismissed in limine.
15. In the assessment year 2006-07, the assessee is aggrieved for disallowance of various expenditure.
16. We have carefully considered the rival contentions. In view of our discussion in the assessment year 2004-05, we direct the AO to retain the addition to the extent of 25 % of disallowance so made. We direct accordingly.
17. In the result, all the appeals of the assessee are allowed in part in terms indicated hereinabove.
This order has been pronounced in the open court X X X X Extracts X X X X X X X X Extracts X X X X
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