9911796707
TMI Blog2006 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... mputing the income of the assessee. - therefore, we answer the question in favour of the assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... wife is also a director. The said M/s. T.C.V. Packers apparently did not have any technical or non-technical staff so as to show that it had the capability to carry on the supervisory work. The equipments of M/s. T.C.V. Packers which were employed in the contract work was paid hire charges on which the Department had no dispute. In M/s. T.C.V. Packers, other than Mr. T.T.V. Dinakaran, there was no person having any knowledge or experience. The assessee was therefore called upon to justify the payment of supervisory charges. The claim of the assessee was that M/s. T.C.V. Packers provided co-ordination, monitoring constantly in the execution of the contracts, making it cost effective, monitoring careful deployment of labour and machines and movement of machines from site to site including vehicles and even looking after administrative work like raising of the bills, etc., and finally supervising the work of the site engineers and the staff. But for the supervisory work carried out by M/s. T.C.V. Packers, the turnover of Rs. 2.46 crores and Rs. 3.36 crores for the financial years 1994 and 1995 would not have been made possible. The Assessing Officer noted that the assessee was having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o considered by him to be excessive or unreasonable shall not be allowed as a deduction. Proviso omitted by DTL (Amend.) Act, 1987, with effect from April 1, 1989. (b) The persons referred to in clause (a) are the following, namely:- (i) where the assessee is any relative of the assessee; an individual (ii) where the assessee is any director of the company/ a company, firm, partner of the firm, association of persons or member of the association or Hindu undivided or family, or any relative family of such director, partner or member; (iii) any individual who has a substantial interest in the business or profession of the assessee, or any relative of such individual; (iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the assessee or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the assessee; or any director, partner or memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false." The Finance Act of 2002 has inserted the words "or any expense, deduction or allowance claimed under this Act which is found to be false" at the end of the clause (b), with retrospective effect from July 1, 1995. The object of the amendment is to specifically provide that any expense, deduction or allowance claimed under this Act which is found to be false, shall be included in the undisclosed income as defined in this clause. The last line of the said definition "or any expense, deduction or allowance claimed under this Act which is found to be false" makes it clear that unless and until the said deduction claimed by the assessee is found to be false by the Revenue, there is no scope for the Revenue to treat the disallowance made under section 40A(2) as undisclosed income. As in this case, the Assessing Officer had not given a finding that this expenditure claimed by the assessee was false. The Assessing Officer only disallowed the expenditure under section 40A(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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