COMMISSIONER OF INCOME TAX-2 V. M/S RAJASTHAN STATE MINES AND MINERAL LTD.

CMAP/258/2019

AI Insights

The case involves the Income Tax Department appealing against a decision of the Tribunal which allowed a claim of Rs.29,39,32,282 for leave encashment expenditure by M/s Rajasthan State Mines And Mineral Ltd. The Department contended that the claim was not made in the Income Tax Return (ITR) filed by the assessee and thus should not have been entertained, citing the Supreme Court's decision in Goetze (India) Ltd. vs. Commissioner of Income-tax. However, the Tribunal and subsequently the High Court found that the Tribunal was correct in allowing the claim based on the materials on record and the legal provisions applicable.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 742763 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 11-11-2021
• Assessment Year: misc
• Other Referred Cases: Goetze (India) Ltd. Vs. Commissioner of Income-tax, CIT Vs. Mitesh Impex & Ors., CIT Vs. Pruthvi Brokers & Shareholders (P) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: ANUROOP SINGHI; NARENDRA BHATI; DEVANSH SHARMA
• Keywords: Appeal Dismissal; Income Tax; Recall of order; Leave Encashment Expenditure
• Section: 157 Taxman 1 (SC); 104 DTR 169 (Guj.); 349 ITR 336 (Bom)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Miscellaneous Application No. 258/2019 Commissioner Of Income Tax-2, New Central Revenue Building Statue Circle Jaipur ----Petitioner Versus M/s Rajasthan State Mines And Mineral Ltd., C-89-90 Lal Kothi Scheme Jaipur Pin / Gir No. Aaacr7857H ----Respondent For Petitioner(s) : Mr. Anuroop Singhi Mr. Narendra S. Bhati Mr. Devansh Sharma For Respondent(s) : HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MS. JUSTICE REKHA BORANA Order 11/11/2021 This miscellaneous application has been filed by the Income Tax Department seeking recall of the order dated 29.05.2019 passed by the Division Bench of this Court in Income Tax Appeal No.39/2019. The Department has filed an appeal raising five separate independent questions of law. The Division Bench proceeded to dismiss the appeal of the Department on the ground that all the questions are covered against the Department through various judgments. The case put forth by the learned counsel for the revenue that though four out of five questions were covered against the revenue, question no.5 was not. The Division Bench therefore committed error in dismissing the entire appeal. (2 of 3) [CMAP-258/2019] We have heard the learned counsel for the revenue and we notice that only one question which remains unentertained by this Court while disposing of the appeal reads as under: “Whether on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the dis-allowance of Rs.29,39,32,282/- on account of leave encashment expenditure despite the fact that the claim of the same was not made in the ITR filed by the assessee? It is true that this question was not examined and, therefore, it would require discussion before either accepting or rejecting the appeal of the revenue. Therefore, we partially recall the order dated 29.05.2019 and consider the appeal of the Department only with respect to this question. The reproduced question would show that the Department objected to the expenditure in the tune of Rs.29.39 crores (rounded off) granted by the Tribunal, which the assessee claimed was an expenditure towards leave encashment of the employees. The principal objection of the Department appears to be that no such claim was raised by the assessee before the assessing officer and in view for the judgment of the Supreme Court in the case of Goetze (India) Ltd. Vs. Commissioner of Income-tax : (2006) 157 Taxman 1 (SC). Therefore, such claim could not have been entertained. Learned counsel for the revenue submitted that unless and until the assessee had raised claim or revise its return raising such a claim, the same could not have been granted. The Tribunal however proceeded on the basis and in our opinion correctly held that the decision of the Supreme Court in Goetze (supra) only refers to the limitation of the power of the assessing officer to entertain a claim which has not been raised. (3 of 3) [CMAP-258/2019] This in any way, restricts the power of the Commissioner (Appeals) or the Tribunal to entertain a claim if otherwise materials on record and question of law can be ascertained on the basis of such material. The Tribunal in this context has placed reliance upon the judgment of the Gujarat High Court in CIT Vs. Mitesh Impex & Ors. (2014) 104 DTR 169 (Guj.) and Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders (P) Ltd. : 349 ITR 336 (Bom). We do not think in this context that the Tribunal has committed any error. Coming to the merits of the claim, it appears that the assessee had advanced an argument which the Tribunal has accepted that to meet with the liability of leave encashment to the employees, the assessee had framed a scheme with Life Insurance Corporation of India under the name “Rajasthan State Mines and Mineral Ltd. - Employees Group Leave Encashment Scheme” and as per the valuation report submitted by the employees of the company for the assesment year in question worked out at Rs.29.43 crores. It was the sum which the assessee had reflected in his balance sheet. It is well settled that any expenditure which is set apart on a scientific estimate basis actually, can be allowed as a business expenditure if such assessment is found to be proper. In our opinion, therefore, no question of law arises and on revival of the appeal both application and appeal are disposed of accordingly. (REKHA BORANA),J (AKIL KURESHI),CJ B.M. Gandhi/AKG-27 "