JAIPUR MINERAL DEVELOPMENT SYNDICATE PVT. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR

ITA 1087/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0181 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 18-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MEENA
• Assessee Lawyers: A B DANGAYACH

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1087/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 JAIPUR MINERAL DEVELOPMENT SYNDICATE PVT. LTD., JAIPUR CUKE VS. THE DCIT, CIRCLE-2, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCJ0074C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI A. B. DANGAYACH (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K. C. MEENA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 26/03/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 29/03/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-1, JAIPUR DATED 20.07.2018 WHEREIN THE SOLE GROUND OF APPEAL RELATES TO DISALLOWANCE OF RS. 81,986/- PAID TO SECURITY CONTR ACTORS FOR PAYMENT OF BONUS TO THE SECURITY STAFF EMPLOYES AT THE ASSESSEES MI NES AND OTHER BUSINESS PREMISES. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN OPEN MINING AND IT IS EXCAVATING/EXTRACTING SOAPSTO NE LUMPS FROM MINING LEASE AREA WHICH HAS BEEN GIVEN ON LEASE BY THE GOVERNMEN T OF RAJASTHAN. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF RS. 1,13,968/- AS PRIOR PERI OD EXPENDITURE IN ITS PROFIT/LOSS ACCOUNT WHICH HAS BEEN CLAIMED FOR TAX PURPOSES IN ITS RETURN OF ITA NO. 1087/JP/2018 JAIPUR MINERAL DEVELOPMENT SYNDICATE PVT. LTD., JAI PUR VS. THE DCIT, JAIPUR 2 INCOME. HENCE, BEING A PRIOR PERIOD EXPENDITURE, TH E SAME WAS DISALLOWED BY THE ASSESSING OFFICER. 3. ON APPEAL, THE LD. CIT(A) OBSERVED THAT THE SAID AMOUNT OF RS. 1,13,968/- CONSISTS OF BONUS PAYMENT OF RS. 81, 986/- AND ARREARS OF WAGES AMOUNTING TO RS. 31,982/-. AS FAR AS ARREARS OF WAG ES OF WORKERS WAS CONCERNED, IT WAS STATED BY THE LD. CIT(A) THAT THE BILL OF WAGES WAS RECEIVED BY THE ASSESSEE FROM THE CONTRACTOR ON 29.11.2013, THEREFORE, LIABILITY TO PAY ARREAR OF WAGES WAS CRYSTALLIZED DURING THE YEAR UN DER CONSIDERATION. HENCE, THE ADDITION OF RS. 31,982/- WAS DELETED. AS FAR A S THE BONUS PAYMENT OF RS. 81,986/- WAS CONCERNED, THE LD. CIT(A) OBSERVED THAT THE BILLS IN RESPECT OF BONUS WERE RECEIVED ON 22.06.2013 AND 29.11.2013 AN D WERE SETTLED DURING THE YEAR UNDER CONSIDERATION. HOWEVER, GIVEN THAT T HESE PAYMENTS WERE MADE TO MARINES SECURITY SERVICES AND DIAMOND SECURITY S ERVICE FOR PROVIDING SECURITY SERVICES TO THE ASSESSEE, IT IS NOT CLEAR WHETHER THE ASSESSEE WAS LIABLE FOR PAYMENT OF BONUS THEREOF. FURTHER, THE ASSESSEE HAS FAILED TO PROVIDE ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE SUCH CLAIM. AC CORDINGLY, THE ADDITION OF RS. 81,986/- WAS CONFIRMED. 4. AGAINST THE AFORESAID FINDINGS OF THE LD CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE COURSE OF HEARING, THE LD AR SUBMITTED THAT THE SAID AMOUNT RELATES TO BONUS PAYMENTS TO MARINES SECURIT Y AND DIAMOND SECURITY SERVICES FOR SECURITY STAFF EMPLOYED AT DAGOTA MINE S AND AT OFFICE PREMISES OF THE ASSESSEE. IT WAS SUBMITTED THAT BONUS PAYMENTS FOR DAGOTA MINES WERE DISPUTED AND WERE SETTLED IN ACCOUNTING YEAR 2013-1 4 RELEVANT TO THE AY 2014- 15. REGARDING BONUS PAYMENT IN RESPECT OF BAPI GRIN DING UNIT FOR ACCOUNTING YEAR 2012-13, THE BILL WAS SUBMITTED TO THE ASSESSE E COMPANY ON 20.11.2013. IT WAS ACCORDINGLY SUBMITTED THAT THE LOWER AUTHORI TIES WERE NOT JUSTIFIED IN ITA NO. 1087/JP/2018 JAIPUR MINERAL DEVELOPMENT SYNDICATE PVT. LTD., JAI PUR VS. THE DCIT, JAIPUR 3 REJECTING THE CLAIM OF THE ASSESSEE SINCE THE LIABI LITY WAS DISPUTED EARLIER AND HAS ONLY CRYSTALLIZED AND SETTLED DURING THE YEAR. 5. THE LD. DR IS HEARD WHO HAS RELIED ON THE FINDIN GS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT UNDER DISPUTE THAT THE ASSESS EE HAS HIRED THE SERVICES OF TWO SECURITY AGENCIES FOR PROVIDING SECURITY SERVIC E AND STAFF AT ITS MINES AND OTHER BUSINESS ESTABLISHMENT. THE AO HAS DISALLOWE D THE ARREAR OF WAGES AS WELL AS BONUS HOLDING IT AS PRIOR PERIOD EXPENDITUR E. THE LD CIT(A) HAS ALLOWED THE ARREARS OF WAGES HOLDING THAT THE LIABILITY HAS CRYSTALLIZED DURING THE YEAR, HOWEVER, THE DISALLOWANCE OF BONUS PAYMENT WAS SUST AINED. TO OUR MIND, THE LIABILITY TOWARDS BOTH SALARY AND BONUS ARE ARISING OUT OF ASSESSEES CONTRACTUAL RELATIONSHIP WITH THE TWO SECURITY AGENCIES. THERE FORE, WHERE THE AMOUNTS WERE DISPUTED IN THE PAST AND BILLS HAVE BEEN RECEI VED DURING THE YEAR, THE LIABILITY TOWARDS THE EXPENDITURE HAS ARISEN AND CR YSTALLIZED DURING THE YEAR AND THE SAME SHOULD BE ALLOWED FOR TAX PURPOSES. IT IS NOT UNDER DISPUTE THAT THE PAYMENT HAS BEEN MADE FOR THE PURPOSES OF PROVISION OF SECURITY SERVICES AND HAS THUS BEEN INCURRED FOR THE PURPOSES OF THE BUSI NESS. REGARDING THE LD CIT(A) CONTENTION AS TO WHETHER THE ASSESSEE IS LIA BLE FOR BONUS OR NOT IS NOT CLEAR, THE QUESTION IS WHERE THE ASSESSEE IS CARRYI NG OUT MINING AND OTHER ACTIVITIES AND HIRES THE SERVICE OF SECURITY STAFF THROUGH A SECURITY AGENCIES, SUCH SECURITY AGENCY IS REQUIRED TO PAY BONUS UNDER A STATUE, IT WILL RECOVER THE BONUS FROM THE ASSESSEE ONLY AND AS FAR AS ASSESSEE IS CONCERNED, THE LIABILITY IS CONTRACTUAL AND WHERE THE SAME HAS CRYSTALLIZED DURING THE YEAR, THE SAME IS ALLOWABLE FOR TAX PURPOSES. IN LIGHT OF ABOVE DISC USSIONS, THE DISALLOWANCE SO MADE IS HEREBY DIRECTED TO BE DELETED. ITA NO. 1087/JP/2018 JAIPUR MINERAL DEVELOPMENT SYNDICATE PVT. LTD., JAI PUR VS. THE DCIT, JAIPUR 4 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/03/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- JAIPUR MINERAL DEVELOPMENT SYNDICATE PVT. LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE-2, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1087/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR