M/s Sarkar Eng. Co., Siliguri V. ITO, WD-2(3), SILIGURI, Siliguri

ITA 1219/KOL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5135 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 18-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Keywords: Depreciation

Judgement Text

I.T.A. NO. 1219/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1219/KOL/ 2015 ASSESSMENT YEAR: 2011-2012 M/S. SARKAR ENGINEERING CO.,....................... ..................................APPELLANT SA-RE-GA-MA, NETAJI SUBHAS ROAD, SUBHASPALLY, SILIGURI-734 001 [PAN : ABAFS 1503 P] -VS.- INCOME TAX OFFICER,................................ ............................RESPONDENT WARD-2(3), SILIGURI, HILL CART ROAD, HAKIMPARA, SILIGURI-734 001 APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, FOR THE ASSESSEE SHRI NILAY BARAN SOM, JCIT, SR. D.R., FOR THE DEPAR TMENT DATE OF CONCLUDING THE HEARING : DECEMBER 17, 2015 DATE OF PRONOUNCING THE ORDER : JANUARY 06, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), SILIGURI DATED 17.07.2015 FOR THE ASSESSMENT YEAR 2011-12. 2. GROUNDS NO. 1, 5 & 6 RAISED BY THE ASSESSEE IN T HIS APPEAL ARE GENERAL IN NATURE, WHICH DO NOT CALL FOR ANY SPECIF IC ADJUDICATION. 3. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE ADDITION OF RS.1,90,430/- AS SUSTAINED BY THE LD. CIT(APPEALS) ON ACCOUNT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF L ABOUR CHARGES. 4. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF CARRYING ON ELECTRICAL C ONTRACT WORKS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY IT ON I.T.A. NO. 1219/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 2 OF 5 31.03.2012 DECLARING TOTAL INCOME OF RS.8,97,690/-. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS.19,04,127/- WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF LABOUR CHARGE S. ALTHOUGH SELF-MADE DEBIT VOUCHERS WERE PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER IN SUPPORT OF ITS CLAIM FOR LABOUR CHARGES, THE ASSESSING OFFICER HEL D THAT THE SAME WERE NOT SUFFICIENT TO FULLY ESTABLISH THE AUTHENTICITY AND GENUINENESS OF THE LABOUR CHARGES CLAIMED BY THE ASSESSEE. HE, THEREFO RE, MADE A DISALLOWANCE OF RS.2,85,619/- BEING 15% OF THE TOTA L LABOUR CHARGES CLAIMED BY THE ASSESSEE. 5. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O UT OF LABOUR CHARGES WAS CHALLENGED BY THE ASSESSEE IN THE APPEA L FILED BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF APPELLATE PROCEE DINGS BEFORE THE LD. CIT(APPEALS), IT WAS SUBMITTED BY THE ASSESSEE THAT THE LABOUR CHARGES WERE PAID TO TEMPORARY LABOURERS THROUGH WAGE-SHEET S AND SUCH WAGE- SHEETS DULY SIGNED BY THE LABOURERS WERE ALSO PRODU CED BY THE ASSESSEE FOR VERIFICATION. THE ASSESSEE, HOWEVER, EXPRESSED ITS INABILITY TO PRODUCE SOME OF THE LABOURERS FOR RANDOM EXAMINATION BY THE ASSESSING OFFICER AS SOUGHT BY THE LD. CIT(APPEALS) ON THE GROUND THAT I T WAS DIFFICULT TO TRACE OUT TEMPORARY LABOURERS/WORKERS ENGAGED AT VARIOUS SITES. KEEPING IN VIEW THIS INABILITY EXPRESSED BY THE ASSESSEE, THE LD. CIT(APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKING DISAL LOWANCE OUT OF LABOUR CHARGES BUT RESTRICTED THE SAME TO 10% AS AGAINST 1 5% DISALLOWED BY THE ASSESSING OFFICER. 6. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT NO DEFECT WHATSOEVER WAS POINTED OUT BY THE ASSESSING OFFICER IN THE VOUCHERS PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM FOR LABOUR CHARGES AND 15% OF SUCH LABOUR CHARGES WERE DISALLO WED BY HIM MERELY ON THE GROUND THAT THE VOUCHERS PRODUCED BY THE ASS ESSEE WERE ONLY SELF- MADE VOUCHERS. BEFORE THE LD. CIT(APPEALS), EVEN TH E WAGE-SHEETS DULY I.T.A. NO. 1219/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 3 OF 5 SIGNED BY THE LABOURERS WERE PRODUCED BY THE ASSES SEE FOR VERIFICATION BUT THE LD. CIT(APPEALS) SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LABOUR CHARGES TO T HE EXTENT OF 10% OF THE TOTAL LABOUR CHARGES FOR THE INABILITY OF THE ASSES SEE TO PRODUCE SOME OF THE LABOURERS FOR RANDOM EXAMINATION BY THE ASSESSI NG OFFICER. AS EXPLAINED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AS WELL AS BEFORE ME, THE LABOUR CHARGES IN QUESTION WERE PAID TO THE TEMPORARY LABOURERS ENGAGED AT VARIOUS SITES AND IT WAS, THER EFORE, VERY DIFFICULT TO PRODUCE THE SAME FOR VERIFICATION BY THE ASSESSING OFFICER AS SOUGHT BY THE LD. CIT(APPEALS). KEEPING IN VIEW THE NATURE OF THE BUSINESS OF THE ASSESSEE AS WELL AS THE NATURE OF PAYMENTS MADE TO THE TEMPORARY LABOURERS, I AM OF THE VIEW THAT THE CLAIM OF THE A SSESSEE ON ACCOUNT OF LABOUR CHARGES, WHICH WERE DULY SUPPORTED BY SELF-M ADE VOUCHERS AS WELL AS WAGE-SHEETS DULY SIGNED BY THE CONCERNED LABOURE RS, OUGHT TO HAVE BEEN ACCEPTED ENTIRELY AND THERE WAS NO JUSTIFICATI ON ON THE PART OF THE AUTHORITIES BELOW TO MAKE A DISALLOWANCE OUT OF LAB OUR CHARGES WITHOUT POINTING OUT ANY MATERIAL OR SPECIFIC DEFECT IN THE SELF-MADE VOUCHERS AND WAGE-SHEETS PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. IN THAT VIEW OF THE MATTER, I DELETE THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) OUT OF LABOUR CHA RGES AND ALLOW GROUND NO. 2 OF THE ASSESSEES APPEAL. 7. AS REGARDS THE ISSUE RAISED IN GROUND NO. 3 RELA TING TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF VARIOUS EXPENSES AND SUSTAINED BY THE LD. CIT(APPEALS) TO T HE EXTENT OF RS.24,983/-, IT IS OBSERVED THAT THE DISALLOWANCE O N ACCOUNT OF THE EXPENSES CLAIMED BY THE ASSESSEE ON FREIGHT AND CA RRIAGE, TRAVELLING AND CONVEYANCE AND MISCELLANEOUS EXPENSES IS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) FOR T HE SAME REASONS AS GIVEN WHILE MAKING DISALLOWANCE OF LABOUR CHARGES W ITHOUT POINTING OUT ANY MATERIAL OR SPECIFIC DEFECT IN THE SELF-MADE VO UCHERS PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM FOR THE SAID EXPEN SES. FOLLOWING MY VIEW TAKEN ON THE ISSUE OF DISALLOWANCE ON ACCOUNT OF LA BOUR CHARGES, I DELETE I.T.A. NO. 1219/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 4 OF 5 THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) OUT OF VARIOUS EXPENSES AND ALLOW GROU ND NO. 3 OF THE ASSESSEES APPEAL. 8. AS REGARDS THE ISSUE RAISED IN GROUND NO. 4 RELA TING TO THE DISALLOWANCE OUT OF CAR EXPENSES AND CAR DEPRECIATI ON, IT IS OBSERVED THAT 50% OF THE EXPENSES CLAIMED BY THE ASSESSEE ON MAIN TENANCE OF MOTOR CAR AND ITS DEPRECIATION WAS DISALLOWED BY THE ASSESSIN G OFFICER ON ACCOUNT OF ELEMENT OF PERSONAL USE. ALTHOUGH SUCH PERSONAL USE OF MOTOR CAR BY THE PARTNERS OF THE ASSESSEE-FIRM CANNOT BE RULED O UT IN THE ABSENCE OF ANY RECORD MAINTAINED BY THE ASSESSEE TO SHOW THAT THE MOTOR CAR WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSE OF ITS BUSINESS AND THE LD. CIT(APPEALS) HAS RESTRICTED THE DISALLOWANCE OF 50% MADE BY THE ASSESSING OFFICER TO 25%, I AM OF THE VIEW THE SAME IS STILL ON THE HIGHER SIDE KEEPING IN VIEW THE NATURE OF THE BUSINESS OF THE ASSESSEE AS WELL AS THE FACT THAT THE TOTAL MOTOR CAR EXPENSES CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WERE ONLYRS.24,250/-. IN MY OPINION, IT WOULD BE FAIR AND REASONABLE TO MAKE A DISALLOWANCE OF 15% OUT OF MOTOR CAR EXPENSES AND DEPRECIATION ON ACCOUNT OF ELEMENT OF PERSONAL USE. THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSU E IS ACCORDINGLY MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO R ESTRICT THIS DISALLOWANCE OUT OF MOTOR CAR EXPENSES AND DEPRECIA TION TO 15%. GROUND NO. 4 IS THUS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 06, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 6 TH DAY OF JANUARY, 2016 I.T.A. NO. 1219/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 5 OF 5 COPIES TO : (1) M/S. SARKAR ENGINEERING CO., SA-RE-GA-MA, NETAJI SUBHAS ROAD, SUBHASPALLY, SILIGURI-734 001 (2) INCOME TAX OFFICER, WARD-2(3), SILIGURI, HILL CART ROAD, HAKIMPARA, SILIGURI-734 001 (3) COMMISSIONER OF INCOME-TAX (APPEALS), SILIGURI (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.