THE Dy. CIT, CIRCLE - 2(1), Vijayawada V. M/s Sri Sai Engineering & Drilling, Vijayawada

ITA 39/VIZ/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6587 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R GOVINDHA RAJAN
• Section: 40A(3); 194C

Judgement Text

ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.39/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) DCIT, CIRCLE - 2(1), VIJAYAWADA VS. SRI SAI ENGINEERING & DRILLING, VIJAYAWADA [PAN: ABAFS0788A ] ( % / APPELLANT) ( &'% / RESPONDENT) C.O.58/VIZAG/2013 (ARISING OUT OF I.T.A.NO.39/VIZAG/2013) ( / ASSESSMENT YEAR: 2009-10) SRI SA I ENGINEERING & DRILLING, VIJAYAWADA VS. ADDL. CIT, RANGE - 2 , VIJAYAWADA ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI R. GOVINDHARAJAN, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 05.12.2016 / DATE OF PRONOUNCEMENT : 06.01.2017 ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 2 / O R D E R PER BENCH: THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON FILED BY THE ASSESSEE ARE DIRECTED AGAINST COMMON ORDER PASSED B Y THE CIT(A), VIJAYAWADA DATED 30.11.2012 AND IT PERTAINS TO THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACTS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 21.7.2009 DECLARING TOTAL INCOME OF ` 2,14,79,100/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND ACCORDINGLY, A NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T') WAS ISSUED. IN RESPONSE TO NOTICE, THE AUTHORIZED REPRESENTATIVE O F THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED BOOKS OF A CCOUNTS, BILLS & VOUCHERS AND OTHER INFORMATION CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE A SSESSEE HAS INCURRED VARIOUS EXPENDITURES SUCH AS LABOUR CHARGE S, LABOUR FOODING CHARGES, CROP COMPENSATION, MATERIAL RENT, TRANSPOR TATION CHARGES AND PIT FILLING CHARGES BY WAY OF CASH AND ACCORDINGLY, ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN WHY THE EXPENDITURE INC URRED IN CASH WHICH ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 3 IS IN EXCESS OF THE THRESHOLD LIMIT FIXED UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT CANNOT BE DISALLOWED. SIMILARLY, THE A.O. OBSERVED THAT THE ASSESSEE HAS INCURRED TRANSPORTATION CHARG ES AND PIT FILLING CHARGES WITHOUT DEDUCTING TAX AT SOURCE UNDER THE P ROVISIONS OF SECTION 194C OF THE ACT. SINCE, THE ASSESSEE FAILED TO DED UCT TAX AT SOURCE, THE EXPENDITURE INCURRED UNDER THE HEAD TRANSPORTATION CHARGES AND PIT FILLING CHARGES ARE LIABLE FOR DISALLOWANCE U/S 40( A)(IA) OF THE ACT, HENCE, ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN AS TO WHY THE EXPENDITURE INCURRED UNDER THE HEAD TRANSPORTATION CHARGES AND PIT FILLING CHARGES CANNOT BE DISALLOWED. 3. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE H AS SUBMITTED THAT IT IS INVOLVED IN THE BUSINESS OF EXECUTION OF WORK S CONTRACT GOT WORK CONTRACT FROM ONGC, WHICH IS KNOWN AS INTEGRATED S HOT HOLE DRILLING AND SEISMIC JOB SERVICES. AS A PART OF THIS CONTRACT, IT HAS TO DRILL HOLES IN THE FIELDS OF FARMERS AS PER THE MAPPING PROVIDED B Y ONGC. AFTER COMPLETING THE DRILLING JOB, THE HOLES/PITS HAVE TO BE FILLED WITH MUD. SINCE THE JOB UNDERTAKEN INVOLVES LABOUR INCENTIVES , THE ASSESSEE HAS ENGAGED GANG LABOURERS LOCALLY AND PAID LABOUR CHAR GES ON PERIODICAL BASIS THROUGH A GROUP LEADER AND THE TOTAL PAYMENTS TO INDIVIDUAL LABOURERS DOES NOT EXCEED THE THRESHOLD LIMIT PRESC RIBED UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT, THEREFORE, THE DISALLOWANCE OF ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 4 EXPENDITURE INCURRED UNDER THE HEAD LABOUR CHARGES DOES NOT ARISE. THE ASSESSEE FURTHER SUBMITTED THAT THESE ARE THE EXPEN SES ACTUALLY INCURRED BY US IN THE COURSE OF OUR BUSINESS OF DRILLING OF HOLES AS PER THE MAPPING GIVEN BY ONGC. IN CERTAIN PLACES OF WORK, THE MAINTENANCE OF VOUCHERS ARE CARRIED BY EMPLOYEES WHO ARE NOT FULLY AWARE OF PROPER MAINTENANCE OF SUCH VOUCHERS. BASICALLY, CONTRACT WORKS AT SITES HAS BEEN MANAGED BY UNORGANIZED WORKERS NOT MAINTAINED PROPER VOUCHERS FOR THE EXPENDITURE INCURRED, THEREFORE, THE VOUCHE RS FOR THE SAID EXPENDITURE ARE MISPLACED. IN SO FAR AS PAYMENT OF LABOUR CHARGES IS CONCERNED, THE LABOUR CHARGES HAS BEEN PAID TO INDI VIDUAL LABOURERS THROUGH A GROUP LEADER ON PERIODICAL BASIS BASED ON THE NUMBER OF MAN DAYS WORKED BY EACH LABOURER AND DEBITED IN THE BOO KS OF ACCOUNTS BY TAKING ONE CONSOLIDATED VOUCHER, HOWEVER, THE INDIV IDUAL PAYMENT DOES NOT EXCEED THE MAXIMUM LIMIT PRESCRIBED FOR DISALLO WANCE U/S 40A(3) OF THE ACT. IN SO FAR AS TRANSPORTATION CHARGES, THE ASSESSEE HAS FURNISHED ALL THE BILLS AND VOUCHERS OF EACH SINGLE PAYMENT A ND SUM OF THE TOTAL AMOUNT PAID TO INDIVIDUAL TRANSPORTERS DOES NOT EXC EED THE PRESCRIBED LIMIT FOR APPLICATION OF TDS PROVISIONS U/S 194C OF THE ACT AND ACCORDINGLY, TDS WAS NOT DEDUCTED. ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 5 4. THE A.O. AFTER CONSIDERING THE EXPLANATIONS OF T HE ASSESSEE, HELD THAT THE ASSESSEE FAILED TO PRODUCE PROPER BILLS AN D VOUCHERS IN SUPPORT OF SOME OF THE EXPENDITURE LIKE LABOUR CHARGES, LAB OUR FOODING CHARGES AND TRANSPORTATION CHARGES. THE A.O. FURTHER OBSER VED THAT THE ASSESSEE HAS INCURRED EXPENDITURE BY WAY OF CASH IN EXCESS OF ` 20,000/- PRESCRIBED U/S 40A(3) OF THE ACT. THE ASS ESSEE FAILED TO OFFER ANY EXPLANATIONS FOR NOT MAKING THE PAYMENT OTHER T HAN BY WAY OF CASH, THEREFORE, OPINED THAT THE EXPENDITURE INCURRED UND ER THE HEAD TRANSPORTATION CHARGES, CROP COMPENSATION, LABOUR C HARGES, LABOUR FOODING CHARGES AND MATERIAL RENT IS NOT DEBITABLE UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. SIMILARLY, THE A.O. OBSERVED THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATIONS FOR NOT D EDUCTING TDS UNDER THE PROVISIONS OF SECTION 194C OF THE ACT, TOWARDS TRANSPORTATION CHARGES AND PIT FILLING CHARGES, EVEN THOUGH THE EX PENDITURE INCURRED UNDER THE HEAD TRANSPORTATION CHARGES AND PIT FILLI NG CHARGES ARE LIABLE FOR TDS UNDER THE PROVISIONS OF SECTION 194C OF THE ACT. WITH THESE OBSERVATIONS DISALLOWED TRANSPORTATION CHARGES, CRO P COMPENSATION, LABOUR CHARGES, LABOUR FOODING CHARGES AND MATERIAL RENT UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. SIMILARLY , THE A.O. DISALLOWED TRANSPORTATION CHARGES AND PIT FILLING CHARGES UNDE R THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF T AX AT SOURCE. ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 6 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. TH E CIT(A) AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSE E, PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE, WHEREIN THE CIT(A) DE LETED ADDITIONS MADE BY THE A.O., TOWARDS DISALLOWANCE OF EXPENDITURE U/ S 40A(3) OF THE ACT IN RESPECT OF LABOUR CHARGES AND LABOUR FOODING CHA RGES. HOWEVER, CONFIRMED ADDITIONS MADE BY THE A.O. TOWARDS DISALL OWANCE OF TRANSPORTATION CHARGES BY HOLDING THAT THE ASSESSEE HAS PAID AMOUNT TO EACH TRANSPORTER WHICH EXCEED THE THRESHOLD LIMIT F IXED UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE CIT(A ) ALSO CONFIRMED ADDITIONS MADE BY THE A.O. TOWARDS DISALLOWANCE OF MATERIAL RENT BY HOLDING THAT THE ASSESSEE FAILED TO PROVE THE EXPEN DITURE WITH NECESSARY EVIDENCES. IN SO FAR AS DISALLOWANCE OF TRANSPORTA TION CHARGES AND PIT FILLING CHARGES UNDER THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT, THE CIT(A) BY FOLLOWING THE ITAT, VISAKHAPATNAM SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTERS VS. ACI T IN ITA NO.477/VIZAG/2008 DATED 16.12.2011, DIRECTED THE A. O. TO RESTRICT THE DISALLOWANCE TO THE EXTENT THE AMOUNTS REMAINED UN- PAYABLE AT THE END OF THE FINANCIAL YEAR. IN SO FAR AS DISALLOWANCE O F PENALTIES, THE CIT(A) CONFIRMED ADDITIONS MADE BY THE A.O. TO THE EXTENT OF ` 2,57,761/- AND ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 7 BALANCE AMOUNT HAS BEEN DELETED BY STATING THAT THE EXPENDITURE INCURRED UNDER THE HEAD PENALTIES IS PAID TO ONGC T O COMPENSATE THE DAMAGES CAUSED TO THE PLANT AND MACHINERY, BUT NOT ANY PENALTY PAID FOR VIOLATION OF ANY OF THE PROVISIONS OF THE ACT. THE CIT(A) CONFIRMED ADDITIONS MADE BY THE A.O. TOWARDS ADHOC DISALLOWAN CE OF EXPENDITURE BY HOLDING THAT THE ASSESSEE FAILED TO PROVE THE EX PENDITURE WITH NECESSARY EVIDENCES. AGGRIEVED BY THE CIT(A) ORDER , THE REVENUE IS IN APPEAL BEFORE US. 6. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM REVENUE APPEAL IS DISALLOWANCE OF LABOUR CHARGES, LABOUR FO ODING CHARGES AND CROP COMPENSATION UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE FACTS WHICH LEAD TO DISALLOWANCE OF THESE EXPEN DITURES UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT, ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM HAS UNDERTAKEN A WORKS CONTRACT FR OM M/S. ONGC FOR INTEGRATED SHOT HOLE DRILLING AND SEISMIC JOB SERV ICES. THE SCOPE OF WORK INVOLVES DIGGING HOLES IN THE FIELDS OF FARMER S AS PER THE MAPPING PROVIDED BY ONGC AND RE-FILLING THE HOLES/PITS WITH MUD. IN THE PROCESS, THE ASSESSEE HAS INCURRED CERTAIN EXPENDIT URE LIKE CROP COMPENSATION, LABOUR CHARGES AND LABOUR FOODING CHA RGES BY WAY OF CASH. THE A.O. DISALLOWED THE EXPENDITURE BY INVOK ING THE PROVISIONS OF SECTION 40A(3) OF THE ACT, BY HOLDING THAT THE ASSE SSEE HAS PAID ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 8 AMOUNTS IN EXCESS OF ` 20,000/- OTHERWISE THAN BY WAY OF ACCOUNT PAYEE CROSS CHEQUE/DEMAND DRAFT IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE A.O. FURTHER WAS OF THE OPINION THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATIONS FOR NOT P AYING THE AMOUNT BY WAY OF CHEQUE/DEMAND DRAFT. THEREFORE, OPINED THAT EXPENDITURE INCURRED UNDER THE HEAD LABOUR CHARGES, LABOUR FOOD ING CHARGES AND CROP COMPENSATION CANNOT BE ALLOWED AS DEDUCTION WH ILE COMPUTING INCOME FROM BUSINESS AND ACCORDINGLY, DISALLOWED TH E EXPENDITURE UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 7. THE ASSESSEE CLAIMS THAT THE JOB UNDERTAKEN BY I T IS LABOUR INCENTIVE AND ACCORDINGLY, IT HAS ENGAGED GROUP LAB OURERS ON VARIOUS PLACES OF WORK AND PAID THEM WAGES ON NUMBER OF MAN DAYS WORKED, THROUGH A GROUP LEADER AND THE INDIVIDUAL PAYMENT D OES NOT EXCEED THE SPECIFIED LIMITS PROVIDED UNDER THE PROVISIONS OF S ECTION 40A(3) OF THE ACT. THE ASSESSEE FURTHER SUBMITTED THAT IT HAD PA ID WAGES TO THE LABOURERS ON WEEKLY BASIS BASED ON THE NUMBER OF MA N DAYS THROUGH A GROUP LEADER. THE ASSESSEE FURTHER SUBMITTED THAT IT HAD MAINTAINED SELF-MADE VOUCHERS FOR THE EXPENDITURE, HOWEVER, CO ULD NOT PRODUCE THE VOUCHERS BECAUSE THEY WERE DESTROYED BY RATS AT THE WORK SITES. THE ASSESSEE FURTHER SUBMITTED THAT IT IS NOT THE CASE OF THE A.O. THAT THE ASSESSEE DID NOT INCUR THESE EXPENDITURE AND IN FAC T HE COULD NOT HAVE ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 9 SAID SO BECAUSE, THE VERY NATURE OF THE CONTRACT AW ARDED BY ONGC DEMANDS EMPLOYMENT OF LABUOR ON LARGE SCALE TO CARR Y OUT THE DRILLING OPERATIONS WITHIN THE TIME FRAME ALLOTTED BY THE CO NTRACTEE. THE ASSESSING OFFICER MADE THE DISALLOWANCE ONLY ON THE PRESUMPTION THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40A(3) OF THE ACT, BASED ON THE ENTRIES RECORDED IN THE BOOKS OF ACCOU NTS IGNORING THE VERY NATURE OF WORKS UNDERTAKEN BY THE ASSESSEE, WHICH D EMANDS EMPLOYMENT OF HUGE LABOUR FORCE. THE ASSESSEE HAS PAID LABOURERS THROUGH A GANG LEADER AND DEBITED THE CONSOLIDATED PAYMENT IN THE BOOKS OF ACCOUNTS ON WEEKLY BASIS, IF THE INDIVIDUA L PAYMENTS TO A LABOURER IS CONSIDERED, IT DOES NOT EXCEED THE AMOU NTS PRESCRIBED UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND ACC ORDINGLY, THE A.O. WAS ERRED IN DISALLOWING THE TOTAL EXPENDITURE. THE AS SESSEE FURTHER SUBMITTED THAT IT HAS FURNISHED REQUIRED EVIDENCES IN THE FORM OF AFFIDAVITS FROM ITS EMPLOYEES WHO ACTED AS SUPERVIS ORS AT THE WORK SITES AND UNDER WHOSE SUPERVISION THE LABOUR PAYMENTS WER E DISBURSED. THE ASSESSEE ALSO FURNISHED AFFIDAVITS FROM SOME OF THE LABOURERS WHO ACTED AS GROUP LEADERS WHO HAVE CONFIRMED THE FACT THAT T HE LABOUR PAYMENTS TO ANY SINGLE LABOURER IN A GIVEN INSTANCE DOES NOT EXCEED THE PRESCRIBED LIMIT PROVIDED U/S 40A(3) OF THE ACT. ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 10 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. DISALLOWED LABOUR CHARGES UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT, FOR THE REASON THAT THE EXPENDITURE INCURR ED UNDER THE HEAD LABOUR CHARGES WAS INCURRED BY CASH IN EXCESS OF TH E THRESHOLD LIMIT FIXED UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE A.O. OBSERVED THAT AS PER THE LEDGER ACCOUNT SUBMITTED B Y THE ASSESSEE, THE LABOUR CHARGES WERE PAID TO INDIVIDUAL PERSONS IN E XCESS OF ` 20,000/-, OTHERWISE THAN BY WAY OF CHEQUE/DEMAND DRAFT. THOU GH, THE ASSESSEE CLAIMS TO HAVE PAID THE LABOUR CHARGES THROUGH A GR OUP LEADER, FAILED TO PROVE SUCH CLAIM WITH NECESSARY EVIDENCES. THE A.O . GAVE HIS OWN REASONS FOR COMING TO THE CONCLUSION THAT EXPENDITU RE INCURRED BY THE ASSESSEE IS IN EXCESS OF THE THRESHOLD LIMIT PROVID ED U/S 40A(3) OF THE ACT. THE A.O. REFERRED TO THE LEDGER ACCOUNT FURNI SHED BY THE ASSESSEE, WHEREIN THE ASSESSEE HAS ACCOUNTED LABOUR PAYMENTS ON WEEKLY BASIS, BASED ON THE TOTAL MAN DAYS WORKED BY THE LABOURERS IN A GROUP MULTIPLIED BY AMOUNT OF WAGES PAID TO EACH MAN DAYS . THE ASSESSEE HAS RECORDED A NARRATION IN THE ENTRY IN THE BOOKS OF ACCOUNTS WHICH READS THAT CASH PAID TOWARDS GROUP-1 SEISMIC LABOUR PAYMENT FROM 1.4.2008 TO 15.4.2008 ON TOTAL MAN DAYS OF 5,600 @ ` 120/- PER MAN DAYS. BASED ON THE ENTRIES RECORDED IN THE BOOKS O F ACCOUNTS WHICH ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 11 EXCEEDS THE MAXIMUM AMOUNT PRESCRIBED U/S 40A(3) OF THE ACT, THE A.O. CAME TO THE CONCLUSION THAT THE ASSESSEE HAS P AID CASH TO INDIVIDUAL LABOURERS WHICH IS IN EXCESS OF THE AMOU NT PRESCRIBED U/S 40A(3) OF THE ACT, THEREFORE, DISALLOWED BY INVOKIN G PROVISIONS OF SEC.40A(3) OF THE ACT. 9. IT IS AN ADMITTED FACT THAT SECTION 40A(3) OF TH E ACT, PROVIDES FOR DISALLOWANCE OF ANY EXPENDITURE, WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH ANY PAYMENT IS MADE TO ANY PERSON IN CASH IN EXCESS OF ` 20,000/- IN A SINGLE DAY. THEREFORE, WHILE COMPUT ING THE INCOME FROM PROFITS & GAINS OF BUSINESS, ANY PA YMENT IN CONTRAVENTION OF PROVISIONS OF SECTION 40A(3) OF TH E ACT CANNOT BE ALLOWED AS DEDUCTION, IF SUCH PAYMENT IS MADE IN EX CESS OF ` 20,000/- OTHERWISE THAN BY WAY OF ACCOUNT PAYEE CHEQUE/DEMAN D DRAFT. HOWEVER, THE PROVISO PROVIDED TO SECTION 40A(3) OF THE ACT, PROVIDES FOR NO DISALLOWANCE AND NO PAYMENT SHALL BE DEEMED TO T HE PROFITS & GAINS OF BUSINESS OR PROFESSION UNDER SUB-SECTION (3) OF THIS SECTION, WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT IN EXCESS OF ` 20,000/-, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE, CONSIDERATI ON OF BUSINESS ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 12 EXPEDIENCY AND OTHER RELEVANT FACTORS. THEREFORE, FROM PLAIN READING OF SECTION 40A(3) OF THE ACT AND PROVISIO PROVIDED THE REIN, IT IS AMPLY CLEAR THAT ALL PAYMENTS ARE NOT COMES UNDER THE RIGORS OF PROVISIONS OF SECTION 40A(3) OF THE ACT. IN THE CASES WHERE GENUINENESS OF THE PAYMENTS ARE NOT DOUBTED, JUST BECAUSE THE PAYMENTS ARE EXCEEDED THE THRESHOLD LIMIT, DISALLOWANCE CANNOT BE MADE, IF THE ASSESSEE HAS EXPLAINED THE REASONS FOR NOT MAKING PAYMENTS OTHER THAN BY WAY O F ACCOUNT PAYEE CHEQUE/DEMAND DRAFT. 10. IN THE PRESENT CASE ON HAND, THE ASSESSEE IS IN VOLVED IN THE BUSINESS OF EXECUTION OF WORK FOR ONGC, WHICH REQUI RES EMPLOYMENT OF LARGE NUMBER OF LABOURERS. THE ASSESSEE HAS EMPLOY ED LARGE NUMBER LABOURERS AND PAID WAGES ON WEEKLY BASIS BASED ON T HE NUMBER OF MAN DAYS WORKED BY EACH LABOURER THROUGH A GROUP LEADER EMPLOYED AMONG THEM. ON PERUSAL OF THE DETAILS FILED BY THE ASSES SEE, WE FIND THAT THE ASSESSEE HAS ACCOUNTED LABOUR PAYMENTS ON WEEKLY BA SIS BASED ON TOTAL MAN DAYS WORKED BY EACH GROUP. THE ASSESSEE HAS PA ID ` 120/- PER DAY FOR EACH LABOURER. IF YOU CALCULATE THE TOTAL NUMBER MAN DAYS WORKED BY EACH LABOURER IN A MONTH MULTIPLIED BY TO TAL WAGES PAID FOR EACH MAN DAYS, WHICH WORKS OUT TO LESS THAN ` 20,000/- IN EACH CASE. ON FURTHER VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS FURNISHED AFFIDAVITS FROM THE EMPL OYEES WHO WORKED ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 13 AS SUPERVISORS, THROUGH WHOM LABOUR PAYMENTS HAVE B EEN DISBURSED WHEREIN IT WAS STATED THAT INDIVIDUAL LABOUR PAYMEN T TO A SINGLE PERSON DOES NOT EXCEED THE THRESHOLD LIMIT PRESCRIBED U/S 40A(3) OF THE ACT. THE ASSESSEE ALSO FURNISHED AFFIDAVITS FROM FEW EMP LOYEES WHO ACTED AS A GROUP LEADER, WHEREIN THEY HAVE STATED THAT THEY HAVE DISBURSED THE WAGES TO INDIVIDUAL LABOURERS ON WEEKLY BASIS BASED ON THE MAN DAYS WORKED BY EACH LABOURER AND SUCH PAYMENT DOES NOT E XCEED THE PRESCRIBED LIMIT PROVIDED U/S 40A(3) OF THE ACT. 11. THE PROVISIONS OF SECTION 40A(3) OF THE ACT, MA KES IT CLEAR THAT THE DISALLOWANCE IS NOT AUTOMATIC IN ALL CASES, WHERE T HE PAYMENT EXCEED ` 20,000/-. THE PROVISO PROVIDED TO SECTION 40A(3) O F THE ACT, SPECIFICALLY EXEMPT PAYMENT, IN SUCH CASES AND SUCH CIRCUMSTANCE S AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AND EXTENT O F BANKING FACILITIES AVAILABLE, CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. THEREFORE, IF THE PAYMENTS ARE GENUINE AN D THE BUSINESS EXPEDIENCY SO PROVIDES, JUST BECAUSE THE AMOUNT PAI D ARE IN EXCESS OF THE THRESHOLD LIMITS CANNOT BE DISALLOWED UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. IN THE PRESENT CASE ON HAND, TH E ASSESSEE PROVED BEYOND DOUBT THAT HE HAD MADE PAYMENTS THROUGH SUPE RVISORS ON WEEKLY BASIS BASED ON THE MAN DAYS WORKED BY EACH L ABOURER. THE ASSESSEE ALSO PROVED BY FILING NECESSARY AFFIDAVITS THAT AMOUNT PAID IN ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 14 EACH CASE DOES NOT EXCEED THE PRESCRIBED LIMIT PROV IDED U/S 40A(3) OF THE ACT. WE ALSO NOTICED THAT IT IS NOT THE CASE OF THE A.O. THAT THE ASSESSEE DID NOT INCUR THESE EXPENSES AND IN FACT H E COULD NOT HAVE SAID SO BECAUSE THE VERY NATURE OF THE CONTRACT AWARDED BY ONGC DEMAND THE ASSESSEE TO EMPLOY LABOUR ON A LARGE SCALE TO C ARRY OUT THE DRILLING OPERATIONS WITHIN THE TIME FRAME ALLOWED BY THE ASS ESSEE. THE A.O. MADE THE DISALLOWANCES MERELY ON THE PRESUMPTION TH AT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40A(3) OF TH E ACT, BY REFERRING TO THE ENTRIES RECORDED IN THE BOOKS OF ACCOUNTS WITHO UT UNDERSTANDING THE NATURE OF WORK CARRIED OUT BY THE ASSESSEE. EVEN O N PERUSAL OF THE LEDGER EXTRACT FURNISHED BY THE ASSESSEE, THE ASSES SEE CATEGORICALLY STATED BY WAY OF NARRATION PROVIDED TO EACH ENTRIES , WHEREIN IT WAS STATED THAT THE AMOUNT PAID ON THE BASIS OF TOTAL M AN DAYS WORKED BY A GROUP OF LABOURERS MULTIPLIED BY AMOUNT OF WAGES PA ID PER DAY. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS ERR ED IN DISALLOWING TOTAL EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS LABOUR CHARGES BY INVOKING PROVISIONS OF SECTION 40A(3) OF THE ACT. 12. IN SO FAR AS DISALLOWANCE OF CROP COMPENSATION PAYMENT OF ` 55,82,100/-, THE A.O. DISALLOWED EXPENDITURE BY INV OKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT, FOR THE REASON THAT T HE EXPENDITURE INCURRED UNDER THE HEAD WAS PAID BY CASH IN EXCESS OF THE PRESCRIBED ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 15 LIMIT PROVIDED U/S 40A(3) OF THE ACT. IT IS THE CO NTENTION OF THE ASSESSEE THAT PAYMENTS WERE MADE TO LAND OWNERS TOWARDS COMP ENSATING THE DAMAGES CAUSED TO THE CROP AS WELL AS LAND WHILE DI GGING HOLES AT THEIR LANDS AND THE PAYMENTS RECORDED IN THE LEDGER ACCOU NT COMPRISING PAYMENTS MADE TO DIFFERENT LANDLORDS ON A SINGLE DA Y, HOWEVER, EACH PAYMENT TO A SINGLE PERSON DOES NOT EXCEED ` 20,000/-. THE ASSESSEE HAS ACCOUNTED PAYMENTS MADE ON EACH DAY BY A SINGLE ENTRY, HOWEVER, EACH INDIVIDUAL PAYMENT TO A SINGLE PERSON DOES NOT EXCEED THE PRESCRIBED LIMIT PROVIDED UNDER THE ACT. THE ASSES SEE HAS FILED INDIVIDUAL AFFIDAVITS FROM THE RECIPIENT OF COMPENS ATION AND AS PER WHICH THE MAXIMUM PAYMENT TO INDIVIDUALS PER PIT WORKS TO LESS THAN ` 3,000/-, THEREFORE, THE A.O. WAS ERRED IN DISALLOWING TOTAL CROP COMPENSATION PAID BASED ON THE ENTRIES RECORDED IN THE BOOKS OF ACCOUNTS. 13. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIAL ON RECORD, WE FIND THAT THE A.O. HAS DISALLOWED AMOUNT BASED O N THE ENTRIES FOUND IN THE LEDGER ACCOUNT FURNISHED BY THE ASSESSEE. O N PERUSAL OF THE LEDGER ACCOUNT FURNISHED BY THE ASSESSEE, WE FIND T HAT THE ASSESSEE HAS PAID CROP COMPENSATION OF ` 100/- PER PIT BASED ON THE TOTAL NUMBER OF PITS DIGGED IN THEIR LANDS. ON FURTHER VERIFICATIO N OF THE DETAILS FILED BY THE ASSESSEE, WE FIND THAT EACH INDIVIDUAL PAYMENT TO A SINGLE PERSON DOES NOT EXCEED THE PRESCRIBED LIMIT PROVIDED U/S 4 0A(3) OF THE ACT. ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 16 THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS ERR ED IN DISALLOWING CROP COMPENSATION PAID TO FARMERS BASED ON THE BOOK ENTRIES WITHOUT APPRECIATING THE FACT THAT INDIVIDUAL PAYMENT DOES NOT EXCEED THE THRESHOLD LIMIT PROVIDED U/S 40A(3) OF THE ACT. 14. IN SO FAR AS DISALLOWANCE OF FOODING CHARGES TO LABOURERS, THE ASSESSEE SUBMITTED THAT IT HAD PAID FOOD CHARGES TO LABOURERS AT WORK SITES BASED ON THE CONTRACTUAL OBLIGATION WITH THE LABOURERS. THE ASSESSEE FURTHER SUBMITTED THAT IT HAD ENGAGED LABO URERS FROM BENGAL AND OTHER PARTS AND PAID THEM FOOD CHARGES THROUGH A MISTRY AND COST OF SUCH FOOD CHARGES WORKS OUT TO APPROXIMATELY ` 25/- PER LABOURER PER DAY. THE PAYMENTS WERE MADE ON WEEKLY BASIS BASED ON THE TOTAL NUMBER OF MAN DAYS WORKED BY EACH LABOURER MULTIPLI ED BY AMOUNT PAID PER DAY, WHICH WAS DISBURSED THROUGH SUPERVISOR. H OWEVER, IN NO CASES, INDIVIDUAL PAYMENT DOES NOT EXCEED THE PRESC RIBED LIMIT PROVIDED U/S 40A(3) OF THE ACT, THEREFORE, THE A.O. WAS ERRE D IN DISALLOWING FOODING CHARGES PAID TO LABOURERS BY INVOKING THE P ROVISIONS OF SECTION 40A(3) OF THE ACT. 15. HAVING HEARD BOTH THE SIDES, WE FIND THAT THE A .O. HAS MADE ADDITIONS OF ` 1,37,63,500/- BY INVOKING THE PROVISIONS OF SECTIO N 40A(3) OF THE ACT, BY HOLDING THAT INDIVIDUAL PAYMENTS MAD E TO A SINGLE PERSON EXCEEDS THE THRESHOLD LIMIT PROVIDED U/S 40A(3) OF THE ACT. THE A.O. ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 17 FURTHER OBSERVED THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATIONS NOT MAKING THE PAYMENTS BY WAY OF ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT. THE ASSESSEE ALSO FAILED TO EXPLAIN THE SITUATION W ARRANTS PAYMENT OF FOOD CHARGES BY CASH. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS ENGAGED LABOURERS FROM BENGAL AND ON CONTRACTUAL OB LIGATION IT HAS PAID FOOD CHARGES TO LABOURERS AT WORK SITE @ ` 25/- PER DAY BASED ON THE NUMBER OF WORKING DAYS, WHICH WAS DISBURSED THROUGH MISTRY. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE, FOR THE REA SON THAT THE A.O. HAS NOT DOUBTED THE GENUINENESS OF EXPENDITURE INCURRED BY THE ASSESSEE. THE A.O. DISALLOWED EXPENDITURE MERELY ON THE GROUN D THAT THE EXPENDITURE INCURRED BY THE ASSESSEE EXCEEDS THE TH RESHOLD LIMIT PRESCRIBED U/S 40A(3) OF THE ACT. WE DO NOT FIND A NY MERITS IN THE FINDINGS OF THE A.O., FOR THE REASON THAT ON PERUSA L OF THE LEDGER EXTRACT FURNISHED BY THE ASSESSEE, WE FIND THAT THE ASSESSE E HAS PAID FOOD CHARGES ON WEEKLY BASIS @ ` 25/- PER DAY FOR NUMBER OF WORKING DAYS. THE ASSESSEE HAS RECORDED THE PAYMENTS IN THE BOOKS OF ACCOUNTS ON THE BASIS OF TOTAL NUMBER OF MAN DAYS WORKED BY EAC H GROUP MULTIPLIED BY AMOUNT PAID PER DAY, WHICH WAS PAID THROUGH A GR OUP LEADER EMPLOYED AMONG THE LABOURERS. THE A.O. BASED ON TH E ENTRIES RECORDED IN THE BOOKS OF ACCOUNTS CAME TO THE CONCLUSION THA T THE ASSESSEE HAS PAID FOODING CHARGES TO A SINGLE PERSON, WHICH EXCE EDS THE MAXIMUM ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 18 LIMIT PRESCRIBED U/S 40A(3) OF THE ACT. THEREFORE, WE ARE OF THE OPINION THAT THE A.O. WAS ERRED IN DISALLOWING THE LABOUR F OODING CHARGES BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE AC T DESPITE THE FACT THAT THE ASSESSEE HAS PROVED THAT INDIVIDUAL PAYMENT DOE S NOT EXCEED THE PRESCRIBED LIMIT. 16. THE CIT(A) AFTER CONSIDERING THE RELEVANT FACTS HAS RIGHTLY DELETED ADDITIONS MADE BY THE A.O. TOWARDS LABOUR CHARGES, LABOUR FOODING CHARGES AND CROP COMPENSATION U/S 40A(3) OF THE ACT . WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDER OF THE LD. CIT( A). HENCE, WE INCLINED TO UPHOLD CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 17. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS DISALLOWANCE OF PIT FILLING CHARGES U/S 40(A)(IA) OF THE ACT. T HE A.O. DISALLOWED PIT FILLING CHARGES UNDER THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT FOR FAILURE TO DEDUCT TDS U/S 194C OF THE ACT. IT IS T HE CONTENTION OF THE ASSESSEE THAT THE EXPENDITURE INCURRED UNDER THE HE AD PIT FILLING CHARGES IS PAID WITHIN THE END OF THE FINANCIAL YEAR AND NO PART OF THE ABOVE EXPENDITURE IS OUTSTANDING AS ON 31.3.2009. SINCE, ALL THE EXPENDITURE INCURRED WAS PAID BEFORE THE END OF THE PREVIOUS YE AR, NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT. IN THIS REGA RD, ASSESSEE RELIED UPON THE DECISION OF ITAT, VISAKHAPATNAM IN THE CAS E OF MERILYN SHIPPING & TRANSPORTERS VS. ACIT (SUPRA). WE FIND FORCE IN THE ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 19 ARGUMENTS OF THE ASSESSEE, FOR THE REASON THAT THE CIT(A) AFTER CONSIDERING THE RELEVANT FACTS AND ALSO RELIED UPON THE DECISION OF ITAT, VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRA NSPORTS VS. ACIT (SUPRA), DELETED ADDITIONS MADE BY THE A.O. BY HOLD ING THAT THE EXPENDITURE INCURRED UNDER THE HEAD PIT FILLING CHA RGES HAS BEEN PAID WITHIN THE SAME FINANCIAL YEAR AND NO PART OF THE E XPENDITURE IS OUTSTANDING AT THE END OF THE FINANCIAL YEAR. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT(A). HENCE, WE IN CLINED TO UPHOLD CIT(A) ORDER AND REJECT GROUND RAISED BY THE REVENUE. 18. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION MADE TOWARDS PENALTIES OF ` 39,82,144/-. THE A.O. MADE ADDITIONS TOWARDS PENALTIES FROM THE DESCRIPTION OF THE HEAD UNDER WH ICH THIS EXPENDITURE WAS BOOKED PRESUMING IT TO BE DUE TO VIOLATION OF L AW. IT IS THE CONTENTION OF THE ASSESSEE THAT THE EXPENDITURE INC URRED UNDER THE HEAD PENALTIES IS PAID TO ONGC TO COMPENSATE THE DAMAGES CAUSED TO THE PLANT AND MACHINERY PROVIDED BY THE CONTRACTEE AT T HE TIME OF EXECUTION OF WORK. THE ASSESSEE HAS TAKEN EQUIPMENTS FROM M/ S. ONGC ON RENTAL BASIS, SUBJECT TO A CONDITION THAT ANY DAMAGES CAUS ED TO THE EQUIPMENTS HAS TO BE BORNE BY THE ASSESSEE. THE AS SESSEE HAS PAID CERTAIN AMOUNT TOWARDS DAMAGES TO ONGC, WHICH WAS M ISCONSTRUED BY THE A.O. BECAUSE THE ASSESSEE DEBITED THE SAID AMOU NT UNDER THE HEAD ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 20 PENALTIES. WE FIND FORCE IN THE ARGUMENTS OF THE A SSESSEE, FOR THE REASON THAT THE ASSESSEE HAS INCURRED CERTAIN AMOUN T TOWARDS DAMAGES PAID TO ONGC FOR HIRING THE EQUIPMENTS. THE ASSESS EE HAS PAID AMOUNT TO COMPENSATE THE DAMAGES CAUSED TO THE EQUIPMENTS WHICH WAS DEBITED TO THE PENALTYS ACCOUNT. WE FURTHER OBSERV ED THAT THE ASSESSEE ALSO PAID CERTAIN AMOUNT TOWARDS INTEREST FOR LATE PAYMENT OF SERVICE TAX AND INTEREST ON LATE PAYMENT OF TDS. THE CIT(A) AF TER EXAMINING THE DETAILS FURNISHED BY THE ASSESSEE, CONFIRMED ADDITI ONS MADE BY THE A.O. IN RESPECT OF PENALTIES PAID IN THE FORM OF INTERES T FOR DELAYED PAYMENT OF SERVICE TAX AND TDS. HOWEVER, DELETED AMOUNT IN CURRED TOWARDS DAMAGES PAID TO ONGC FOR USING THE EQUIPMENTS. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE LD. C IT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND REJECT THE GROUND RAISED BY THE REVENUE. 19. THE ASSESSEE HAS FILED CROSS OBJECTION SUPPORTI NG THE ORDER OF CIT(A). IN THE CROSS OBJECTION, THE ASSESSEE ALSO CHALLENGED THE ADDITIONS CONFIRMED BY THE CIT(A) IN RESPECT OF TRA NSPORTATION CHARGES U/S 40A(3) OF THE ACT, TRANSPORTATION CHARGERS DISA LLOWED U/S 40(A)(IA) OF THE ACT AND TRANSPORTATION CHARGES DISALLOWED FOR W ANT OF VOUCHERS. THE ASSESSEE ALSO CHALLENGED ADDITIONS CONFIRMED BY THE CIT(A) TOWARDS MATERIAL RENT DISALLOWED U/S 40A(3) OF THE ACT. SI MILARLY, THE ASSESSEE ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 21 CHALLENGED THE ADDITIONS CONFIRMED BY THE CIT(A) TO WARDS ADHOC DISALLOWANCE OF CERTAIN EXPENDITURE. THE LD. A.R. FOR THE ASSESSEE, AT THE TIME OF HEARING, DID NOT PRESSED GROUNDS RAISED CHALLENGING THE ADDITIONS CONFIRMED BY THE CIT(A) TOWARDS TRANSPORT ATION CHARGES, MATERIAL RENT AND ADHOC DISALLOWANCE OF EXPENDITURE . THEREFORE, THE GROUND RAISED BY THE ASSESSEE CHALLENGING ADDITIONS CONFIRMED BY THE CIT(A) TOWARDS TRANSPORTATION CHARGES DISALLOWED FO R WANT OF VOUCHERS, TRANSPORTATION CHARGES DISALLOWED U/S 40A(3) OF THE ACT AND TRANSPORTATION CHARGES DISALLOWED U/S 40(A)(IA) OF THE ACT AND MATERIAL RENT DISALLOWED U/S 40A(3) OF THE ACT AND ADHOC DIS ALLOWANCE OF EXPENDITURE ARE DISMISSED AS NOT PRESSED. 20. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.39/VIZAG/2013 IS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IN CO NO.58/VIZAG/2013 IS ALSO DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH JAN17. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER # /VISAKHAPATNAM: ' /DATED : 06.01.2017 VG/SPS ITA NO.39/VIZAG/2013 & CO 58/VIZAQG/2013 SRI SAI ENGINEERING & DRILLING, VIJAYAWADA 22 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-2(1), VIJAYAWAD A 2. / THE RESPONDENT SRI SAI ENGINEERING & DRILLING, DR.NO.54-18-26, 2 ND LINE, LIC COLONY, VIJAYAWADA-8 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM