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TMI Blog2018 (6) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... be fair and reasonable to disallow the wages of ₹ 38,68,613/- in question to the extent of 25%. The net profit of the assessee’s business after such disallowance would be little more than 10%, which in our opinion, is fair and proper - restrict the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) out of labour charges to 25% - Appeal of the assessee is partly allowed. - I.T.A. No. 255/KOL/2016 - - - Dated:- 13-6-2018 - Shri P.M. Jagtap, Accountant Member and Shri S.S.Viswanethra Ravi , Judicial Member For The Appellant : Shri U. Dasgupta, A.R. For The Respondent : Shri Sal long Yaden, Addl . CIT, D. R. ORDER Per Shri P.M. Jagtap, A.M. :- This appeal filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was not found acceptable by the Assessing Officer. He also did not accept the explanation of the assessee that such bifurcation in the labours was made at the instance of Nilkanth Ferro Alloys and Cosmic Ferro Alloys. According to him, only wages, which were subject to deduction of PF ESI Scheme were the genuine expenditure incurred by the assessee and the separate wage registers stated to be maintained for the labours, who were not subject to PF ESI scheme, were nothing but the clear attempt made by the assessee to claim bogus labour charges. He accordingly disallowed the labour charges claimed on the basis of such wage registers amounting to ₹ 38,68,613/- by treating the same as bogus wages in the assessment completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 80 persons and except May June, 2011 labourers supplied to M/s. Nilkanth Ferrow Ltd. and M/s. Cosmic Ferrow Alloys Ltd. are 39 each. Payments are also more than 1 lakh except May June, 2010. I have perused the identity card submitted by appellant of few labourers and these iden1i cards are issued by M/s. Cosmic Ferrow Alloys Ltd. and total number of card given by the appellant are 18 only. Similarly other identity card issued by M/s. Makali Enterprise supplied by the appellant are 17 only. The perusal of these identity cards show that the appellant had sent labours only when the labours are having valid identity card. All these identity card shows that these 18 labours issued by Makali Enterprise were deployed sometime during the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. Counsel for the assessee submitted that the business of the assessee being that of executing the jobs on labour contract basis, its major expenditure was on account of labour charges. He submitted that in support of its claim for labour charges, the assessee had maintained separate party-wise registers and even the reasons for maintaining multiple registers for one party were also explained by the assessee. He contended that some of the workers were not made subject to deduction of PF ESI contribution at the instance of the parties and, therefore, separate registers for such workers were maintained by the assessee. He contended that the assessee no doubt had violated the relevant statutory provision relating to PF ESI Scheme in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were also other reasons given by them to support the action of making such disallowance. 6. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the entire income of ₹ 1.76 crores was earned by the assessee during the year under consideration from execution of labour contracts for two parties and keeping in view the nature of these activities of the assessee, which generated the entire income, we find merit in the contention of the ld. Counsel for the assessee that the major expenditure required to be incurred by the assessee to earn the said income was on account of labour charges. It is also observed that the said claim of the assessee for labour charges was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the assessee for such wages was not fully verifiable, but there is no justification in disallowing such wages entirely as made by the authorities below. Having regard to all the relevant facts of the case, we are of the view that it would be fair and reasonable to disallow the wages of ₹ 38,68,613/- in question to the extent of 25%. The net profit of the assessee s business after such disallowance would be little more than 10%, which in our opinion, is fair and proper. We accordingly modify the impugned order of the ld. CIT(Appeals) on this issue and restrict the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) out of labour charges to 25%. 7. In the result, the appeal of the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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