METCO ENTERPRISES P. LTD, MUMBAI V. ADDL CIT RG 10(2), MUMBAI

ITA 8529/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84656 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-12-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 08-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Depreciation; Tangible material
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI D. KARUNAKAR RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 8529/MUM/2010 ASSESSMENT YEAR: 2004-05 M/S. METCO ENTERPRISES PVT. LTD. 12-A, WING B, SITA ESTATE, MAHUL ROAD, CHEMBUR, MUMBAI 400 074 PAN:AABCM 5237 H VS. ADDL. CIT RANGE 10(2) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA REVENUE BY : SHRI AKHILENDRA YADAV DATE OF HEARING : 04 . 12 . 2014 DATE OF ORDER : 19 . 1 2 .2014 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE A GAINST ORDER DATED 30.09.2010, PASSED BY THE LD.CIT(A) -22 , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE A.Y . 2004-05. 2. IN THE VARIOUS GROUNDS OF APPEAL, THE ASSESSEE H AS CHALLENGED MAINLY FOLLOWING DISALLOWANCES:- (I) DISALLOWANCE OF 15% OF DRIVERS BHATTA EXPENSES OF RS.8,48,785/- [GROUND NO. 1] (II) DISALLOWANCE OF 40% OF TRIP EXPENSES AND ROAD EXPENSES OF RS.34,93,255/- [GROUND NO. 2] ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 2 (III) ADDITION OF RS.12,81,000/- BEING TRANSPORTATI ON CHARGES WHICH WAS SALARY PAID BY THE DIRECTORS TO THE DRIVERS ENGAGED BY THEM. 3. THE BRIEF FACTS ARE THAT ASSESSEE COMPANY IS ENG AGED IN THE BUSINESS OF TRADING, TRANSPORT CONTRACTORS AND COMM ISSION AGENT. REGARDING DRIVERS BHATTA CHARGES, THE AO NOTED THA T, ASSESSEE HAS DEBITED SUM OF RS.56,58,570/- IN THE P/L ACCOUNT, W HICH WERE MAINLY INCURRED THROUGH CASH VOUCHERS PAID TO VARIOUS DRIV ERS. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THE D ETAILS OF THE DRIVER AND THE FREE MEAL PROVIDED TO THE DRIVERS. IT WAS A LSO SUBMITTED THAT THE SALARY OF A DRIVERS WERE BELOW TAXABLE LIMIT AND TH EY WERE NOT FILING RETURN OF INCOME. IT WAS ALSO MENTIONED THAT THESE DRIVERS WERE POORLY PAID @ 100 TO 125 PER DAY AND NO REGULAR SALARY WAS BEING PAID TO THEM. THE SALARY ALSO INCLUDED BHATTA, WHICH INCLUD ED THEIR EXPENSES AND MEAL EXPENSES WHICH RANGES UPTO RS.370 PER DAY. THE ASSESSING OFFICER AFTER DETAILED DISCUSSION, HELD THAT, OUT O F THE AMOUNT CLAIMED AT RS.56.58 LAKHS, 25% SHOULD BE DISALLOWED. HIS DETAI L REASONING HAS BEEN DEALT FROM PAGES 15 TO 18 OF THE ASSESSMENT ORDER. 4. BEFORE THE LD.CIT(A), THE ASSESSEE GAVE DETAILED SUBMISSIONS AND ALSO VARIOUS EVIDENCES IN SUPPORT OF BHATTA CHARGES PAID TO THE DRIVERS. THE ASSESSEES SUBMISSIONS AND EVIDENCES WERE SENT TO THE AO FOR SUBMITTING HIS REMAND REPORT. THE ASSESSEES SUBMIS SION AND THE EXTRACT OF THE REMAND REPORT HAS BEEN DEALT BY THE LD.CIT(A ) IN PARAS 7.1 AND 7.2. THEREAFTER, THE LD.CIT(A) ANALYZED THE MATERIA L PLACED ON RECORD AND NOTED THAT IN PAST SCRUTINY ASSESSMENT WERE DON E, WHEREIN BHATTA CHARGES WERE EITHER NOT DISALLOWED OR ONLY 10% OF T HESE EXPENSES WERE DISALLOWED. HE ALSO NOTED PERCENTAGE OF DRIVER BHAT TA CHARGES TO THE ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 3 TRANSPORTATION CHARGES RECEIPTS AND THEREFORE, HELD THAT DISALLOWANCE SHOULD BE RESTRICTED TO 15%. 5. BEFORE US, LEARNED COUNSEL SUBMITTED THAT THE EN TIRE VOUCHERS ALONG WITH THE DETAILS AND EXPLANATION WERE FILED B EFORE THE AO AS WELL AS LD.CIT(A), DESPITE THAT, AD HOC DISALLOWANCES HA VE BEEN. LD.CIT(A) AFTER NOTING ENTIRE FACTS HAS ULTIMATELY HELD THAT 15% SHOULD BE RESTRICTED. SUCH A DISALLOWANCE IS NOT CALLED FOR A ND IN ANY CASE SUCH A DISALLOWANCE IS QUITE EXCESSIVE. 6. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE REASONING GIVEN BY THE LD.CIT(A) AND HELD THAT DISALLOWANCE C ONFIRMED BY THE LD.CIT(A) IS QUITE REASONABLE. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ALSO ON THE PERUSAL OF THE FINDING GIVEN BY THE AO AS WELL AS LD.CIT(A) AN D THE MATERIAL PLACED ON RECORD, WE FIND THAT THE ONLY BASIS FOR DISALLOW ANCE IS THAT EXPENSES HAVE BEEN INCURRED IN CASH. THE ASSESSEE HAD EXPLAI NED THAT IN THE NATURE OF TRANSPORT BUSINESS THE CASH PAYMENT TO TH E DRIVERS IS INEVITABLE AS THEY ARE NOT READY TO ACCEPT ACCOUNT PAYEE CHEQUES FOR SMALL AMOUNTS RANGING FROM RS.200 TO RS.500. IT HAS BEEN BROUGHT ON RECORD THAT IN A.Y. 2005-06, 10% OF BHATTA CHARGES WAS DISALLOWED, WHEREAS IN THE A.Y. 2006-07 AND 2007-08, LUMP SUM D ISALLOWANCE WAS MADE, WHICH COMES TO 3.05% AND 4.61%. THUS LOOKING TO THE BACKGROUND AND THE PRECEDENCE OF THE EARLIER AND SU BSEQUENT YEARS, WE REFLECTING THE DISALLOWANCE TO 10% OF THE TOTAL EXP ENDITURE DEBITED. ACCORDINGLY GROUND NO. 1 IS TREATED AS PARTLY ALLOW ED. ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 4 8. IN GROUND NO. 2 THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF 40% OF DISALLOWANCE OF TRIP EXPENSES AND ROAD EXPEN SES. THE ASSESSEE HAS DEBITED SUM OF RS.57,29,840/- UNDER THIS HEAD, WHICH ALSO INCLUDED DIESEL EXPENSES PAID IN CASH. UNDER THE HEAD ROAD EXPENSES, SUM OF RS.30,03,297/- WAS DEBITED. ALL THESE EXPENSES INCL UDE TOLL CHARGES, WEIGHMENT CHARGES, TYRE PUNCTURE, SMALL REPAIRS ON ROAD, CLEANING OF VEHICLES, PHONE CALLS, LABOUR CHARGES ETC. THE ASSE SSING OFFICER AFTER ANALYZING THE NATURE OF EXPENSES, WORKED OUT THE DA ILY CASH EXPENSES ON AVERAGE BASIS BY DIVIDING THE TOTAL EXPENSES BY 365 DAYS AND NOTED THAT ASSESSEES TOTAL AVERAGE IS ON HIGHER SIDE. IN RESPECT OF THE ROAD EXPENSES, WE NOTED THAT ASSESSEES MODUS OPERANDI O F CLAIMING THE EXPENSES AND RECORDING IN TO THE BOOKS OF ACCOUNT G OES TO REDUCE THE TAXABLE INCOME. HE SELECTED 34 ENTRIES FROM THE LED GER ACCOUNT WHICH HAS BEEN REPRODUCED IN ASSESSMENT ORDER AT PAGES 2 TO 22 AND THEN NOTED THAT, NOT A SINGLE VOUCHER IN THE FORM OF BIL LS PERTAINING TO THE EXPENSES CLAIMED WERE SUBMITTED. ONLY SIGNATURES OF THE DRIVERS HAVE BEEN OBTAINED WHO WERE UNDER THE CONTROL AND MANAGE MENT OF THE COMPANY. THUS, AO DISALLOWED 50% OF TRIP EXPENSES A ND ROAD EXPENSES AND DISALLOWED THE SUM AGGREGATING RS.43,66,569/- 9. BEFORE LD.CIT(A), THE ASSESSEE AGAIN GAVE DETAIL S SUBMISSIONS AND VARIOUS EVIDENCES IN SUPPORT OF THE CLAIM OF THESE EXPENSES. THESE EXPLANATION ALONG WITH THE EVIDENCES WAS SUBJECT MA TTER OF REMAND PROCEEDINGS. THE AO SUBMITTED HIS REMAND REPORT WHI CH HAVE BEEN DEALT BY THE LD.CIT(A) IN PARA 8.1. AFTER CONSIDERI NG THE ASSESSEES SUBMISSIONS AND REMAND REPORT OF THE AO, THE LD.CIT (A), RESTRICTED THE DISALLOWANCE TO 40%. ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 5 10. BEFORE US, LEARNED COUNSEL SUBMITTED THAT IN SC RUTINY PROCEEDINGS FOR THE A.YS. 2001-02 AND 2002-03, NO SUCH DISALLOW ANCE WAS MADE AND IN A.Y. 2005-06, DISALLOWANCE @ 10% WAS MADE. IN A. Y. 2006-07 AND 2007-08 LUMP SUM DISALLOWANCE WAS MADE WHICH WAS MU CH BELOW 5%. HE ALSO DREW OUR ATTENTION TO THE PERCENTAGE OF THE SE EXPENSES WITH REFERENCE TO THE TRANSPORTATION CHARGES RECEIVED BY THE ASSESSE AND SUBMITTED THAT THE EXPENSE CLAIM WERE QUITE REASONA BLE. THUS HE SUBMITTED THAT IN THIS YEAR, DISALLOWANCE OF 40% IS TOO HIGH AND EXCESSIVE. 11. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE FINDING OF THE LD.CIT(A). 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ALS O ON PERUSAL OF MATERIAL ON RECORD, WE FIND THAT, IN THE EARLIER YE AR AND IN SUBSEQUENT YEARS, THE DISALLOWANCES UNDER THESE HEADS WERE MUC H LESS THAN 10%. THE BASIS GIVEN BY AO TO WORK OUT THE AVERAGE EXPEN SES IS NOT BASED ON PROPER ANALYSIS AS IN THE TRANSPORTATION BUSINESS, AVERAGE DIESEL EXPENSES, AVERAGE FARE EXPENSES ETC. CANNOT BE FIXE D ON STANDARD BASIS. THUS LOOKING TO THE PAST AND SUBSEQUENT HISTORY AND THE PRESENT FACTS OF THE CASE, WE RESTRICT THE DISALLOWANCE @ 10% WHICH WOULD BE QUITE REASONABLE. THUS GROUND NO. 2 IS TREATED AS PARTLY ALLOWED. 13. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E ADDITION OF RS.12.81 LAKHS BEING DRIVERS SALARY PAID BY THE DI RECTORS AND FAMILY MEMBERS, [WHO ARE THE OWNERS OF THE TRUCK/TANK], UN DER THE HEAD TRANSPORTATION CHARGES. THE ASSESSING OFFICER NOT ED THAT THE ASSESSEE HAS PAID TRANSACTION CHARGES OF RS.67,20,804/- OUT OF WHICH RS.60,83,764/- WAS PAID TO PERSONS SPECIFIED U/S 40 A(2)(B). THE AO HAS ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 6 INCORPORATED THE DETAILS OF THE CHARGES PAID TO THE SE PERSONS AND ALSO SHOW TRUCK CHARGES, SALARY, INTEREST, DEPRECIATION DEBITED BY THEM AND THE NET INCOME AND GROSS TAXABLE INCOME OF THESE PE RSONS FROM THE SAID TRANSPORT CHARGES RECEIVED BY THEM PAID. HE NOTED T HAT, AS AGAINST THE TRANSPORT RECEIPT OF RS.46,39,000/-, NET INCOME IN THE HANDS OF THE RELATED PERSONS STOOD AT RS.13,07,148/-. AFTER ANAL YZING THESE PAYMENT AO HELD THAT THE PAYMENT, MADE WAS EXCESSIVE AND WA S PRIMARILY TO SUCK THE PROFIT OF THE ASSESSEE COMPANY. THE ASSESS ING OFFICERS DETAILED ANALYSIS AND REASONING HAVE BEEN GIVEN IN PARA 11 T O 11.5 OF THE ASSESSMENT ORDER. 14. BEFORE THE LD.CIT(A), DETAILED SUBMISSION WERE MADE BY THE ASSESSEE ON WHICH REMAND REPORT WAS CALLED FOR. LD. CIT(A) AFTER ANALYZING THE ASSESSEES SUBMISSIONS AND THE REMAND REPORT, NOTED THAT THE AO HAD RECORDED THE STATEMENT OF ONE OF THE REL ATED PERSON, MS. MADHAVI J. MEHTA TO WHOM HIGHER CHARGES OF RS.7,50, 000/- WAS PAID IN PURSUANCE OF THE SUB-CONTRACTOR AGREEMENT WITH THE ASSESSEE. IN THE SAID AGREEMENT THERE WAS NO MENTION OR DETAILS PERT AINING TO THE DRIVERS SALARY AND THEREFORE, ALL THE EXPENSES CAN BE HELD TO BE BORNE BY THE ASSESSEE COMPANY. ACCORDINGLY, IT WAS HELD T HAT THE SAID LADY HAS NOT PAID DRIVERS SALARY ON THE FOUR TRUCKS OWNED A ND PLIED BY HER AND HENCE PAYMENT MADE BY THE ASSESSEE ON ACCOUNT OF H IRE CHARGES WAS ON HIGHER SIDE. THE LD.CIT(A) FURTHER NOTED THAT TD S CERTIFICATES WERE PRODUCED BEFORE HIM IN FORM 16, TO SHOW THAT TRANSP ORT CHARGES WERE GENUINE ALONG WITH THE CASH FLOW SUMMARY TO PROVE T HEIR SOURCE OF PAYMENT OF DRIVERS SALARY AND LEDGER ACCOUNT. HOWE VER, THE LD.CIT(A) REJECTED THE ASSESSEES EXPLANATION AND UPHELD THE ACTION OF THE AO, ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 7 MAINLY ON THE GROUND THAT IN THE AGREEMENT THERE IS TO MENTION ABOUT DRIVERS SALARY BEING PAID BY THESE PERSONS. 15. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT I N THE PAST SCRUTINY ASSESSMENT AND IN SUBSEQUENT ASSESSMENT YEARS, NO D ISALLOWANCE UNDER THIS HEAD WAS MADE. FURTHER NEITHER THE AO NOR LD.C IT(A) HAS MADE ANY COMPARISON TO PROVE THAT HOW THE PAYMENT MADE O F HIRE CHARGES WAS EXCESSIVE AND WHAT SHOULD HAVE BEEN THE REASONA BLE PAYMENT. HE SUBMITTED THAT PAYMENT MADE TO THE DRIVERS BY THES E RELATED PERSONS WERE ON THE SAME RATE AS PAID BY THE ASSESSEE TO IT S OWN DRIVERS AND THE BASIS ON WHICH THE ASSESSEE COMPANY HAD PAID TH E HIRE CHARGES CANNOT BE DOUBTED OR SAID TO BE NOT GENUINE. IN SOM E OF THE CASES OF THE DIRECTORS, WHICH WERE ASSESSED UNDER SCRUTINY P ROCEEDINGS, NO DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF PAYMENT OF SALARY TO THE DRIVERS. THUS NO DISALLOWANCE SHOULD BE MADE. 16. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE AO AND LD.CIT(A) H AS EXAMINED THE AGREEMENT WITH THESE PERSONS, WHICH DOES NOT MENTIO N ABOUT THE PAYMENT OF DRIVER CHARGES IN RESPECT OF VEHICLES EN GAGED BY THE DIRECTORS/RELATED PERSONS AND THE AO HAS ALSO ANALY ZED THE DATES OF PAYMENT MADE BY THE ASSESSEE TO THESE PERSONS, AND TO PROVE THAT THESE PERSONS COULD NOT HAVE PAID THE DRIVERS SALA RY REGULARLY. THUS, PRESUMPTION WAS RAISED AGAINST THE ASSESSE. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FINDINGS OF THE AO AS WELL AS LD.CIT(A). THE MAIN I SSUE INVOLVE, IS WHETHER OUT SUM OF RS.60,83,734/- PAID TO THE SPECI FIED PERSONS, THE PAYMENT OF DRIVERS OF RS.12,81,000/- MADE BY THEM I S GENUINE OR NOT. ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 8 THE ASSESSING OFFICER HAS ANALYZED THE ISSUE IN DET AIL, WHICH INCLUDES RECORDING OF THE STATEMENT OF ONE OF THE RELATED PE RSON AND ALSO THE SUB-CONTRACT AGREEMENT, WHICH DID NOT INCORPORATE T HE DETAILS PERTAINING TO DRIVERS. FURTHER THESE RELATED PERSONS WERE UNA BLE TO PRODUCE ANY VOUCHERS OF THE SALARY EXPENSES PAID TO THE DRIVERS . THE AO HAS ALSO ANALYZED THE DATES ON WHICH TRANSPORTATION CHARGES WERE RAISED AND THE DAY ON WHICH THE ASSESSEE HAS MADE THE PAYMENT. THE ASSESSEE HAS REBUTTED THE FINDINGS OF THE AO, FIRSTLY, BY GIVING THE CONFIRMATION OF THE HIRE CHARGES PAID AS PER THE LEDGER ACCOUNT AND TDS DEDUCTED ON SUCH PAYMENT; SECONDLY, FILING OF CASH FLOW SUMMARY OF THE RELATED PERSONS TO PROVE THE SOURCE OF PAYMENT OF SALARY BY THEM AN D THE COPY OF DRIVERS SALARY LEDGER ACCOUNT IN THEIR BOOKS; THIRDLY, COPY OF THE RETURN OF INCOME OF THE RELATED PERSONS; AND LASTLY THE NAME OF THE DRIVERS, DETAILS OF THE TRANSACTION ALONG WITH THE VEHICLE N UMBERS AND PAYMENT FOR DRIVER BHATTA. ONCE THE HIRE CHARGES HAVE BEEN PAID TO THE RELATED PERSONS, THEN HOW MUCH SALARY HAS BEEN PAID TO THE DRIVERS BY THE RELATED PERSON FOR THE TRANSPORTATION DONE BY THEM, CANNOT BE QUESTIONED BY THE ASSESSE, UNLESS THERE IS SOME DIR ECT EVIDENCE THAT ASSESSEE WAS PAYING THE SALARY OF THE DRIVERS EMPLO YED BY THESE PERSONS. WHETHER THE HIRE CHARGES PAID TO THESE PER SONS WERE EXCESSIVE HAS TO BE EXAMINED FROM THE ANGLE, WHETHER SUCH A P AYMENT IS UNREASONABLE LOOKING TO THE MARKET VALUE OF SERVICE S RENDERED BY THE RELATED PERSONS HAVING REGARD TO THE OTHER COMPARAB LE INSTANCES UNDER UNCONTROLLED CONDITIONS. TO HOLD THAT SUCH RELATED PERSONS HAVE NOT PAID THE SALARY TO THE DRIVER AND DISALLOW THE SAME IN T HE HANDS OF THE ASSESSEE DOES NOT SEEM TO BE RATIONAL BASIS SANS AN Y MATERIAL ON RECORD. WITHOUT THE DRIVERS, THE TRANSPORTATION BUS INESS CANNOT BE DONE. ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 9 IF ANY ADVERSE INFERENCE IS TO BE DRAWN AGAINST THE PAYMENT OF DRIVER SALARY BY THE RELATED PERSONS, THEN SAME SHOULD BE EXAMINED IN THEIR HANDS, AS THE EXPENSES AGAINST THE HIRE CHARGES HAV E BEEN CLAIMED BY THEM. SO FAR AS THE ASSESSEE IS CONCERNED, IT HAS P AID THE TRANSPORTATION CHARGES AS PER THE AGREEMENT. EVEN IF THE AGREEMENT DOES NOT SPECIFY THE PAYMENT OF DRIVER SALARY, IT DOES NOT LEAD TO A NY INFERENCE THAT THE ASSESSEE HAS PAID THE DRIVERS SALARY WHO WERE WORK ING FOR THESE RELATED PERSONS. TO PROVE THAT THERE IS SIPHONING OF PROFIT S OF THE ASSESSEE COMPANY BY THE RELATED PERSONS, IT HAS TO BE BROUGH T ON RECORD WITH SOME TANGIBLE MATERIAL THAT THE ASSESSE WAS ACTUALL Y PAYING THE DRIVERS SALARY. THE ENTIRE ANALYSIS AND EXERCISE DONE BY TH E AO IS BASED ON PRESUMPTION AND THAT TO BE MAINLY ON THE PREMISE TH AT THE SUB-CONTRACT AGREEMENT DOES NOT SPECIFY, WHO WILL MAKE THE PAYME NT OF SALARY. THE SOURCE OF THE PAYMENT BY THESE PERSONS HAS BEEN DEM ONSTRATED ALONG WITH THE OTHER DOCUMENTS AS MENTIONED ABOVE. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE HIRE CHARGES PAID BY THE ASSESS EE TO THE RELATIVES IS EITHER EXCESSIVE OR SHAM. THE ONLY CASE OF THE DEPA RTMENT IS THAT THE DRIVERS SALARY OF THE TRUCKS BELONGING OR HIRED BY THE RELATED PERSONS MUST HAVE BEEN PAID BY THE ASSESSEE. THUS, WE DO NO T FIND ANY REASON TO UPHELD SUCH A PREMISE, UNLESS THE ENTIRE HIRE CH ARGES AGREEMENT AND HIRE CHARGES PAID TO THE DIRECTORS IS BOGUS OR PROV ED TO BE EXCESSIVE. ACCORDINGLY THE ADDITION SUSTAINED BY THE LD. CIT(A ) IS DELETED GROUND NO. 3 IS THUS ALLOWED. ITA NO. 8529/MUM/2010 M/S. METCO ENTERPRISES PVT. LTD. ASSESSMENT YEAR: 2004-05 10 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DECEMBER, 2014. SD/- SD/- (D.KARUNAKAR RAO) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 19.12.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.