9911796707
TMI Blog2011 (6) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... in these appeals is with regard to the additions made on account of inflated labour expenses. The facts on this issue borne out from the record are almost similar in both the assessment orders i.e. 2005-06 2006-07. The main issue was discussed by the CIT(A) in the assessment year 2005-06 and the decision taken by the CIT(A) in this year was followed in the assessment year 2006-07. Therefore, we discussed the facts pertaining to the assessment year 2005-06 and the brief facts available on record are that out of total expenditure claimed under the head labour expenses, a sum of ₹ 36,26,032/- has been disallowed by the A.O. as inflated labour charges and the same was added to the total income of the assessees. During the course of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. The account of N.S. Subramaniam was credited by an amount of ₹ 13,59,555/- by labour charges and his account was debited by an amount of ₹ 6,34,349/-. Thus the net effect is crediting his account by ₹ 7,25,206/- (13,59,555 6,34,349 = 7,25,206). In the ledger account of B.S. Srinivasaraju the net effect of the transaction is crediting his account by ₹ 7,25,206/- and debiting labour charges account by ₹ 7,25,206/-. In another account of Shri R. Shyam Sunder again the net effect comes to ₹ 7,25,206/-. This account is credited by ₹ 14,45,503/- and labour charges account is debited by ₹ 7,20,297/- so the net effect comes to ₹ 7,25,206/-. 5. The A.O. is also of the view that the Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to the assessment years 2005- 06 2006-07 is of ₹ 4.40 crores. If the addition/disallowance made by the A.O. amounting to ₹ 2.31 crores is deducted from the total labour cost of ₹ 4.40 crores, the percentage would go up to 52.61% which is quite unreasonable in the line of construction business. It was further clarified that labour charges relating to this project incurred and claimed by the assessee in A.Y. 2005-06 2006-07 are at ₹ 93,45,730/- and ₹ 2,73,79,336/- respectively. 7. So the labour component incurred and claimed by the assessee company works out to 29.6% on the cost of the project of the Merridian Seashell. Hence, the labour component incurred and claimed by the assessee is very reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re clearly identifiable and income tax assessees. The Ld. Counsel for the assessee further invited our attention that all the labour expenses booked by the assessees are verifiable and the assessing officer has made additions on estimate basis. 11. The Ld. D.R. on the other hand has placed heavy reliance upon the order of the A.O. Besides he has submitted that the assessee has inflated labour expenses by giving advances to the aforesaid persons only with the intention to reduce the profit in the impugned assessment years. 12. We have carefully examined the order of the lower authorities and the material available on record and we find that the assessee company has debited a substantial amount in the last day of the financial year unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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