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Shri Bhupendra Rathod, Prop. 16/B, Saraswati Society, B/h ESIC Hospital, Gotri Road, Baroda Vs. Dy. CIT, Circle-2(1), Baroda
May, 15th 2014
                     AHMEDABAD "A" BENCH

           Before: Shri D.K Tyagi, Judicial Member
         and Shri Anil Chaturvedi, Accountant Member

                       ITA No. 658/Ahd/2011
                     Assessment Year 2006-07

     Shri Bhupendra Rathod,            Dy. CIT,
     Prop. M/s. Carewell               Circle-2(1),
     Construction, 16/B,          Vs   Baroda
     Saraswati Society, B/h            (Respondent)
     ESIC Hospital, Gotri
     Road, Baroda

        Assessee by:        Sri Mukund Bakshi, A.R.
        Revenue by:         Sri O.P. Batheja, Sr.D.R.

       Date of hearing                  :   05-05-2014
       Date of pronouncement            :   08-05-2014



     This is the assessee's appeal against the order of Ld. CIT(A)-II
Baroda dated 04-11-2010.
I.T.A No.658/Ahd/2011       A.Y. 2006-07                             Page No     2
Sri Bhupendra V. Rathod Prop. M/s Carewell Construction vs. DCIT

2.    At the time of hearing only following ground was pressed:-

      "1.   Ld. CIT(A) ­II, Baroda has erred in law and in facts in
      confirming the addition to the extent of Rs. 4,50,187/- towards salary
      and labour charges paid to persons covered u/s. 40A(2)(b) of the IT
      Act, 1961, on the plea that the appellant failed to prove that the
      same were incurred at arm's length. The said addition being
      erroneous in the facts of the case and in law and, therefore, is
      prayed to be deleted."

3.    Brief facts of the case are that assessee is engaged in the business
of civil construction. Return of income was filed by him declaring total
income of Rs. 8,80,960/-. On verification of the details filed, the AO noted
that as per Form No. 3CD, the assessee had made payment to persons
covered u/s. 40A(2)(b) of the Act as under:-

Name of the person       Amount Nature of payment                  Relationship
Sri Vishrambhai           72,000 Rent                              Father of the
Sri Jagdishbhai V.         90,000 Salary                           Brother of the
Rathod                   2,07,925 Professionals                    assessee
                                  Supervision charges
Sri  Vaibhav        B.     90,000 Salary                           Son    of   the
Rathod                   2,10,335 Professionals                    assessee
                                  Supervision charges
Sri Prashantbhai B.      3,02,114 Professionals                    Son    of   the
Rathod                            Supervision charges              assessee

The assessee was asked to explain the expenses claimed as the payees
were persons covered u/s. 40A(2)(b) of the Act. The assessee according
to AO failed to prove that the payment made to above persons was wholly
and exclusively for the purpose of business. The AO therefore added the
same u/s. 40A(2)(b) of the Income Tax Act.
I.T.A No.658/Ahd/2011       A.Y. 2006-07                            Page No   3
Sri Bhupendra V. Rathod Prop. M/s Carewell Construction vs. DCIT

4.     Ld. CIT(A) after taking into consideration the submissions of the
assessee which were reproduced in para 2.2 of his order, restricted this
disallowance to 50% of the claim made by assessee as before Ld. CIT(A)
also the assessee failed to prove that the payment made to these persons
was wholly and exclusively for the purpose of business. Before us also
assessee has not been able to substantiate his claim that the payment was
exclusively for the purpose of business and therefore we are not inclined to
interfere with the order of Ld. CIT(A) and the same is hereby upheld.

5.     In the result, assessee's appeal is dismissed.
     Order pronounced in open court on the date mentioned hereinabove at
     caption page

               Sd/-                                       Sd/-
   (ANIL CHATURVEDI)                                ( D.K. TYAGI)
 ACCOUNTANT MEMBER                              JUDICIAL MEMBER
Ahmedabad : Dated 08/05/2014
                    / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.

                                                                   By order/  ,

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