Late Smt Shakuntala Bai Govind Rao Rep by G Mahesh, Hyderabad V. Income Tax Officer, Ward-10(1), Hyderabad

ITA 1370/Hyd/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2666 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1370/HYD/2017 ASSESSMENT YEAR: 2009-10 LATE SMT. SHAKUNTHALABAI GOVIND RAO, REP. BY SRI G. MAHESH, HYDERABAD [PAN: ACGPG3694Q] VS THE INCOME TAX OFFICER, WARD-10(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI D.V. ANJANEYULU, AR FOR REVENUE : SMT. SUMAN MALIK, DR DATE OF HEARING : 16-01-2018 DATE OF PRONOUNCEMENT : 24-01-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE, REPRESENTED BY SHRI G. MAHESH, AGAINST THE ORDER OF THE COMMISSIONER OF INCO ME TAX (APPEALS)-12, HYDERABAD, DATED 29-06-2017, CONFIRMI NG THE DISALLOWANCE OF HAMALI CHARGES TO AN EXTENT OF 20% AS AGAINST 30% DISALLOWED BY THE ASSESSING OFFICER (AO). 2. BRIEFLY STATED, ASSESSEE WAS DOING A BUSINESS OF TR ADING IN IRON AND STEEL IN THE NAME OF M/S. MAHESH STEEL INDUSTR IES AND HAS FILED RETURN OF INCOME, ADMITTING TOTAL INCOME OF R S. 9,76,741/- AFTER CLAIMING CERTAIN DEDUCTIONS. IN THE COURSE OF AS SESSMENT PROCEEDINGS, AO HAS DISALLOWED 30% OF LABOUR CHARGE S AND 30% OF HAMALI CHARGES TOTALING TO RS. 13,22,055/-. ON APPEAL , LD.CIT(A) DELETED THE ENTIRE DISALLOWANCE OF LABOUR CHARGES, BU T REDUCED THE I.T.A. NO. 1370/HYD/2017 :- 2 - : DISALLOWANCE OF HAMALI CHARGES TO 20% AS AGAINST 30% MADE BY AO. 3. LD. COUNSEL SUBMITTED THAT ASSESSEE RECEIVES HAMALI CHARGES AS PART OF SALE BILL IN ALMOST ALL TRADING TRANSACTIONS AND THOSE HAMALI CHARGES ARE IN TURN PAID TO VARIOUS HAMALIS. THEREFORE, THERE CANNOT BE ANY DISALLOWANCE, AS THE RECEIPTS ARE A LSO ACCOUNTED FOR IN THE P&L A/C AS PART OF SALES. IN SUP PORT, LD. COUNSEL REFERRED TO THE SUBMISSIONS MADE BEFORE THE LD .CIT(A) AND ALSO PROVIDED CERTAIN COPIES OF THE SALE BILLS. IT WA S HOWEVER, FAIRLY ADMITTED THAT THIS ASPECT OF RECEIPT OF HAMALI CHARGES WA S NOT VERIFIED BY THE AO BUT SUBMITTED THAT NO DISALLOWANCE IS WARRANTED ON HAMALI CHARGES AND LD.CIT(A) SHOULD HAVE DELETE D THE ADDITION LIKE IN THE CASE OF LABOUR CHARGES. 4. LD.DR RELIED ON THE ORDERS OF LD.CIT(A). 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS ON RECORD. EVEN THOUGH THE DISALLOWANCE UNDER THE HEAD LABOUR CHARGES WAS MADE BY THE AO ON THE REASON THA T THERE ARE CASH PAYMENTS BY SELF-MADE VOUCHERS WHICH CANNOT BE V ERIFIED, LD.CIT(A) DELETED THE DISALLOWANCE, AS LD.CIT(A) FO UND THAT ALL THE PAYMENTS HAVE BEEN MADE TO ONE PARTY BY CHEQUE, AFTER DULY DEDUCTING TDS. THEREFORE, THE DISALLOWANCE MADE UNDE R THE HEAD LABOUR CHARGES STANDS ON A DIFFERENT FOOTING THAN T HAT OF HAMALI CHARGES WHICH WERE DISALLOWED AT 30% BY THE AO. LD.CI T(A) RESTRICTED THE SAME TO 20%. CONSIDERING THAT MOST OF THE HAMALI CHARGES ARE STATED TO HAVE BEEN RECEIVED FROM VARIOUS CUSTOMERS AND ARE DULY ACCOUNTED FOR UNDER THE HEAD SALES, D ISALLOWANCE I.T.A. NO. 1370/HYD/2017 :- 3 - : MAY NOT BE WARRANTED AS MADE BY AO. HOWEVER, CONSIDER ING THAT THERE ARE CASH PAYMENTS AND PAYMENTS ARE MADE TO CASUAL LABOUR ENGAGED, I RESTRICT THE DISALLOWANCE TO 10% OF THE CLAI M WHICH SHOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, AO IS DIRECTED TO RESTRICT THE AMOUNT TO 10% OF THE CLAIM. GROUNDS ARE PA RTLY ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 24 TH JANUARY, 2018 TNMM I.T.A. NO. 1370/HYD/2017 :- 4 - : COPY TO : 1. LATE SMT. SHAKUNTHALABAI GOVIND RAO, REP. BY SRI G. MAHESH, C/O. M/S. ANJANEYULU & CO., CHARTERED ACCOUNTANTS, 30, BHAGYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-10(1), HYDERABAD. 3. CIT (APPEALS)-12, HYDERABAD. 4. PR.CIT-VI, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.