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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR
Aforesaid appeal by the assessee is directed against the order dated 30th May 2012, passed by the learned Commissioner (Appeals)– 1, Mumbai, for the assessment year 2007–08.
Dispute in the present appeal is confined to addition of an amount of ` 1,53,805.
2 Shri Suhas M. Jhaveri
Briefly stated the facts are, assessee an individual filed his return of income for the impugned assessment year on 29th October 2007, declaring total income of ` 66,49,170. As observed by the Assessing Officer, assessee is involved in job work of de–coiling and cutting of H.R. oils. During the assessment proceedings, Assessing Officer noticed that the assessee has debited an amount of ` 1,53,805, on account of payment of bonus to employees. On further verification, he found that the workers to whom such payments was made are employed by contractor and they are not employees of the assessee. Referring to the provisions of section 36(1)(ii) of the Act, the Assessing Officer observed that payment of bonus is allowable as deduction only if payee is an employee of the assessee. He, therefore, rejecting the claim of assessee disallowed and added back the amount of ` 1,53,805. The assessee challenged the addition before the learned Commissioner (Appeals). However, the learned Commissioner (Appeals) also confirmed the addition by observing as under:–
Learned Authorised Representative reiterating the stand taken before the Departmental Authorities submitted, though, the concerned persons to whom the payment was made are employees of the contractor but they were continuously doing the loading and unloading work for the assessee. He submitted, as a result of such work force
3 Shri Suhas M. Jhaveri assessee was able to increase his business turnover from ` 62,723 in the month of April quite substantially and the total turnover at the end of the year stood at ` 85,98,119. He submitted, without the active support of the labourer this turnover could not have been achieved. He, therefore, submitted that payment made being for the purpose of business is allowable as a deduction. In support of such contention, he relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s Samarth Shakari Sakhar Karkhana Ltd., [2007] 294 ITR 540 (Bom.).
Learned Departmental Representative relied upon the order of the learned Commissioner (Appeals).
We have considered the submissions of the parties and perused the material available on record. Undisputedly, the assessee has claimed deduction of ` 1,53,805, as payment of bonus to the employees. However, as evident from facts on record the concerned persons to whom the amount was paid are not the employees of the assessee but are employees of the contractor. Therefore, when the assessee has engaged a contractor to carry out the work on certain terms and conditions and payment is also made to the contractor for doing such work, why the assessee should pay anything over and above the amount agreed, that too, to the employees of the contractor
4 Shri Suhas M. Jhaveri is not understood. In these circumstances, the payment made by the assessee cannot be considered to be allowable expenditure as it was not required to be incurred by the assessee. In these circumstances, we are unable to interfere with the order of the first appellate authority. Grounds raised are dismissed.
In the result, assessee’s appeal is dismissed. Order pronounced in the open Court on 04.03.2016