D.C.I.;T Cir - 1,kolkata, Kolkata V. M/s The Jute Corporation of India Ltd, Kolkata

ITA 1348/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4814 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 03-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2013
• Court: TRIBUNAL
• Department Lawyers: HARI SANKAR KUMAR LAL
• Assessee Lawyers: BISWAJIT SYAM; SUJIT KU
• Keywords: Additional evidence
• Section: 43B; 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANES H, AM] ITA NO.1348/KOL/2013 ASSESSMENT YEAR : 2008-09 D.C.I.T., CIRCLE-1, -VERSUS- M/S. THE JUTE CORPOR ATION OF INDIA KOLKATA LTD., KOLKATA (PAN:AABCT8820B) (APPELLANT ) (RESPONDENT) C.O.NO.95/KOL/2013 A/O ITA NO.1348/KOL/2013 ASSESSMENT YEAR : 2008-09 M/S. THE JUTE CORPORATION OF INDIA -VERSUS- D.C.I.T ., CIRCLE-1, LTD., KOLKATA KOLKATA (PAN AABCT8820B) (CROSS OBJECTOR) (RESPONDENT) FOR THE DEPARTMENT : SHRI HARI SANKAR KUMAR LAL, CI T.DR FOR THE RESPONDENT : SHRI BISWAJIT SYAM, FCA & SHRI SUJIT KUMAR GHOSH, FCA DATE OF HEARING : 03.05.2016. DATE OF PRONOUNCEMENT : ORDER PER SHRI M.BALAGANESH, AM THIS APPEAL OF REVENUE ARISES OUT OF ORD ER OF LD.CIT(A)-XXIV, KOLKATA IN APPEAL NO.1149/CIT(A)-XXIV/C-1/12-13 DATED 19.02.20 13 FOR A.Y.2008-09 AGAINST THE ORDER OF ASSESSMENT PASSED U/S 143(3) & 115WE(3 ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THERE COULD BE A DISALLOWANCE TOWARDS PROVISION FOR CLAIMS AMOUNTING TO 1,26,04,522/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF TRADING OF RAW JUTE. IT WAS SUBMITTED THAT JUTE, AN AGRICULTURAL COMMODITY COMPRISES OF A SUBSTANTIAL PORTION OF MOISTURE AND ITS WEIGHT GE TS REDUCED DUE TO A PASSAGE OF TIME. ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 2 IT WAS SUBMITTED THAT CERTAIN PERCENTAGE OF MOISTUR ES WOULD BE REGAINED BETWEEN THE PERIOD OF PROCUREMENT AND DELIVERY. GENERALLY THE M ILLS RAISED CLAIM FOR LOSS OF MOISTURE IN THE FORM OF WEIGHT LOSS APART FROM QUAL ITY VARIANCES, WHEN IT IS DELIVERED TO THEIR POINTS AND CORPORATION HAS TO SET OFF THAT LOSS BY MAKING SUITABLE PROVISION ON REASONABLE BASIS IN ITS ACCOUNTS. OUT OF THIS PROVI SION, THE AMOUNTS WILL BE PAID DURING THE YEAR IN THE FORM OF CLAIMS ON DIFFERENT MILLS. THE ASSESSEE SUBMITTED THAT THE PROVISIONS MADE WAS ON FAIR ESTIMATION OF CLAIMS EX PECTED CONSIDERING THE NATURE OF TRADE INVOLVED. THE ASSESSEE MADE A PROVISION OF RS .1,45,00,000/- OUT OF WHICH RS.1,26,04,522/- WAS ACTUALLY PAID BY THE ASSESSEE TO THE MILLS FOR CLAIMS SET OFF. THE LIST OF THESE PROVISIONS TOGETHER WITH THE DETAILS OF PAYMENTS WERE SUBMITTED BEFORE THE LD. AO. HOWEVER, THE LD. AO TREATED THE SAID PR OVISION FOR CLAIMS AS MERELY CONTINGENT AND AN UNASCERTAINED LIABILITY AND ACCOR DINGLY DISALLOWED THE SAME IN THE ASSESSMENT. 4. ON FIRST APPEAL THE LD. CIT(A) FOUND THAT OUT OF THE TOTAL PROVISION OF RS.1,45,00,000/-, THE ASSESSEE HAS ACTUALLY PAID R S.1,26,04,522/- TOWARDS SETTLEMENT OF CLAIMS AND RESTRICTED THE DISALLOWANCE TO RS.18, 95,478/- (RS.1,45,00,000/- - RS.1,26,04,522/-). AGGRIEVED, THE REVENUE IS IN APP EAL BEFORE US ON THE FOLLOWING GROUND :- 1 THAT THE LD CIT(A) HAS ERRED AND NOT JUSTIFIE D IN DELETING THE DISALLOWANCES MADE ON ACCOUNT OF PROVISIONS FOR CLAIMS AMOUNTING TO RS.1,26,04,522/- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. D R COULD NOT CONTROVERT THE FINDINGS RECORDED BY THE LD. CIT(A). IN RESPONSE TO THIS THE AR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). WE FIND THAT THE LD. CIT(A ) HAD ALLOWED THE CLAIM BASED ON ACTUAL PAYMENT MADE BY THE ASSESSEE TOWARDS SETTLEM ENT OF CLAIMS. HENCE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) ON T HIS GROUND. ACCORDINGLY GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 6. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER DISALLOWANCE OF RS.9,86,287/- ON ACCOUNT OF MISCELLANEOUS EXPENSES COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 3 7 . THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE DEBITED A SUM OF RS.49,31,434/- IN ITS PROFIT AND LOSS ACCOUNT TOWARDS MISCELLANEOUS E XPENSES AND THE ASSESSEE FURNISHED THE SUB-HEAD WISE BREAK UP OF THE SAID EXPENDITURE FOR ITS HEAD OFFICE, REGIONAL OFFICE, SONALI, KOLKATA BRANCH AND DELHI OFFICE WHICH CAME TO RS.54,23,230/-. THE LD. AO OBSERVED ACCORDINGLY THAT THE MISCELLANEOUS EXPENSE S DEBITED TO THE PROFIT AND LOSS ACCOUNT IS NOT CORRECT. THE LD. AO CALLED FOR THE R ECONCILIATION OF THE SAID DIFFERENCE FROM THE ASSESSEE WHICH WERE NOT FILED. ACCORDINGLY HE PROCEEDED TO DISALLOW 20% OF THE MISCELLANEOUS EXPENSES ACTUALLY DEBITED IN THE PROFIT AND LOSS ACCOUNT AND MADE DISALLOWANCE OF RS.9,86,287/- IN THE ASSESSMENT. 8. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED T HAT THE TOTAL EXPENDITURE OF RS.54,23,230/- TOWARDS MISCELLANEOUS EXPENSES WAS A CTUALLY INCURRED AND THERE IS A CREDIT OF RS.4,91,793.12 TO THE ACCOUNT OF MISCELL ANEOUS EXPENSE AND HENCE THE NET AMOUNT OF RS.49,17,434/- WAS ACTUALLY DEBITED IN TH E PROFIT AND LOSS ACCOUNT. THE LD. CIT(A) STATED THAT THE ASSESSEE IS A GOVT. OF INDIA ENTERPRISE AND THERE CANNOT BE ANY ADDITION BASED ON ESTIMATED DISALLOWANCE AND ON SUR MISES AND CONJECTURES. ACCORDINGLY HE DELETED THE ESTIMATED DISALLOWANCE O F 20% AMOUNTING TO RS.9,86,287/-. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND :- 2 THAT THE LD CIT(A) HAS ERRED AND NOT JUSTIFIED IN DELETING THE DISALLOWANCES MADE ON ACCOUNT OF MISC. EXPENSES AMOUNT TO RS.9,86 ,287/- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) HAD GIVEN A CATEGORICAL FINDING ABOUT THE FACTS OF THIS ISSUE. WE FIND NO INFIRMITY IN THE ORDER PASSE D BY THE LD.CIT(A) IN THIS REGARD. ACCORDINGLY GROUND NO.2 RAISED BY THE REVENUE IS DI SMISSED. 10. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER DISALLOWANCE OF PRIOR PERIOD EXPENSES IN THE SUM OF RS.31,29,210/- COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 4 11. THE ASSESSEE DEBITED A SUM OF RS.31,29,210/- AND THE SAME WAS REFLECTED AS PRIOR PERIOD EXPENDITURE IN THE ACCOUNTS OF THE ASSESSEE AS WELL AS IN THE TAX AUDIT REPORT. THE LD. AO DISALLOWED THE SAME ON THE GROUND THAT T HE EXPENDITURE HAS NOT PERTAINED TO THE YEAR UNDER APPEAL. 12. ON FIRST APPEAL THE ASSESSEE SUBMITTED THAT T HE ENTIRE PRIOR PERIOD EXPENDITURE DEBITED TO THE PROFIT AND LOSS ACCOUNT HAD ACTUALLY CRYSTALLIZED DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO A.Y.2008-09. IT WAS ALSO S UBMITTED THAT AS PER THE POLICY OF THE ASSESSEES CORPORATION, EXPENDITURE IN EXCESS OF RS.10,000/- WHICH COULD NOT BE FAIRLY ESTIMATED DURING THE RELATED YEAR OF EXPENSE S, BUT CRYSTALLIZED AND PAID DURING THE CURRENT YEAR WERE BEING CHARGED TO PRIOR PERIOD EXPENSES AS THE SAME COULD NOT BE ASCERTAINED BEFORE ITS OCCURRENCE PERIOD. THE DETAI LS OF THE SAID PRIOR PERIOD EXPENSES ARE AS BELOW :- A) BONUS : RS.10,19,794/- : THIS REPRESENTS BONUS PAID FOR THE FINANCIAL YEAR 2006-07 FOR WHICH NO PROVISION HAS BEEN MADE IN THE EARLIER YEAR AND CLAIMED AS DEDUCTION. THIS IS A STATUTORY PAYMENT MADE AS PER PAYMENT OF BONUS ACT AND IN ANY CASE IT IS ALLOWABLE AS DEDUCTION U/S 43B OF THE ACT. B) COMPANYS CONTRIBUTION TO GRATUITY FUND : RS.5,56,184/- : THERE WAS A SHORT FALL IN THE CONTRIBUTION TO THE GRATUITY FUND TO BE MADE BY THE ASSESSEES CORPORATION DURING THE FINANCIAL YEAR 2006-07 WHICH WAS ACTUALL Y PAID DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO A.Y.2008-09. THE FACT IS THAT T HE CORPORATION BEING A PUBLIC SECTOR UNDERTAKING CONTRIBUTED IN EACH YEAR TO ITS GRATUITY FUND ADMINISTERED BY LIC AND THE AMOUNT OF SHORT FALL AS INTIMATED BY LIC FO R THE FINANCIAL YEAR 2006-07 WERE PAID IN THE FINANCIAL YEAR 2007-08. HENCE THE SAME COULD BE CRYSTALLIZED DURING THE YEAR UNDER APPEAL AND IN ANY CASE THE SAME IS ALLOW ABLE AS DEDUCTION U/S 43B OF THE ACT ON PAYMENT BASIS. C) MEDICAL EXPENSES REIMBURSEMENT : RS.2,82,061/- - THE ASSESSEE SUBMITTED THAT AS PER THE TERMS OF EMPLOYMENT, THE ASSESSEE IS LIABLE TO REIMBURSE MEDICAL EXPENSES TO ITS EMPLOYEES. THIS AMOUNT REPRESENTS MEDICAL BILLS REIMBURSED DURING THE FINANCIAL YEAR 2007-08 TO THE EMPLOYEES OF THE ASSESSEES COR PORATION WHO HAD NOT SUBMITTED THEIR CLAIM FOR REIMBURSEMENT DURING THE FINANCIAL YEAR 2006-07 BUT BELATEDLY ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 5 SUBMITTED THE SAME DURING THE FINANCIAL YEAR 2007-0 8. IT WAS SUBMITTED THAT NO PROVISION OR CLAIM OF THIS EXPENDITURE WAS MADE IN THE EARLIER YEARS ON ACCRUAL BASIS. D) GODOWN RENT AND STORAGE : RS.9,12,767/- : IT WAS STATED THAT THE PORTION O F GODOWN RENT WAS PAID DUE TO ENHANCEMENT OF RENT W.E .F. EARLIER PERIOD WERE BOOKED UNDER PRIOR PERIOD EXPENSES. THE RENTS WERE ENHANCE D ON DEMAND AND AFTER CONSIDERATION OF APPROPRIATE AUTHORITY FOLLOWING NE GOTIATION WITH THE LANDLORD, THE ASSESSEE ACTUALLY PAID THE ENHANCED RENT DURING THE FINANCIAL YEAR 2007-08 ALTHOUGH IT PERTAINS TO THE PERIOD RELATING TO THE EARLIER YEAR S. 13. THE LD. CIT(A) APPRECIATING THE AFORESAID FA CTS AND SUBMISSIONS HAD CATEGORICALLY FOUND THAT ALL THESE ITEMS GOT CRYSTA LLIZED DURING THE FINANCIAL YEAR 2007- 08 RELEVANT TO A.Y.2008-09 AND HELD THAT THE ASSESS EE IS ENTITLED FOR DEDUCTION OF THE SAME AND ACCORDINGLY DELETED THE ADDITION MADE BY T HE LD. AO. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND :- 3. THAT THE LD C!T(A) HAS ERRED AND NOT JUSTI FIED IN DELETING THE DISALLOWANCES MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES TO THE TUN E OF RS.31,29,210/- 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HEREIN ABOVE REMAIN UNDISP UTED AND HENCE ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE FIND FROM THE AFORESAID FACTS THAT THE ENTIRE EXPENDITURE HAVE BEEN DULY CRYSTALLIZED AND PAID DURING THE YEA R UNDER APPEAL. THOUGH THE SAME WERE CLASSIFIED AS PRIOR PERIOD EXPENSES IN ACCORDA NCE WITH THE ACCOUNTING POLICY OF THE CORPORATION AND GENERALLY ACCEPTED ACCOUNTING P RINCIPLES. IT IS NOT THE CASE OF THE REVENUE THAT THE SAID EXPENSES ARE NOT REGULAR BUSI NESS EXPENDITURE. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAD MADE A CLAIM O F THE AFORESAID EXPENDITURE ON ACCRUAL BASIS IN THE EARLIER YEARS. WE ALSO FIND TH AT THE EXPENSES LIKE BONUS AND GRATUITY FUND ARE ALSO ALLOWABLE, IN ANY CASE, U/S 43B OF THE ACT ON PAYMENT BASIS. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE O RDER PASSED BY THE LD. CIT(A). ACCORDINGLY GROUND NO.3 RAISED BY THE REVENUE IS D ISMISSED. ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 6 15. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER DISALLOWANCE TO BE MADE TOWARDS PROVISIONS FOR BONUS IN THE SUM OF RS. 11,93,115/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 16. THE ASSESSEE PROVIDED FOR BONUS IN ITS BOOKS AS IS BEING DONE OVER THE YEARS IN ACCORDANCE WITH THE PROVISION OF THE PAYMENT OF BON US ACT TO THE EXTENT OF RS.22,33,555/- AND CLAIMED THE SAME AS DEDUCTION IN THE RETURN OF INCOME. THE LD. AO DISALLOWED THE SAME AS THE SAME WAS NOT PAID BY TH E ASSESSEE DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO A.Y.2008-09. 17. ON FIRST APPEAL, THE ASSESSEE SUBMITTED EVID ENCES BEFORE THE LD. CIT(A) THAT OUT OF THE PROVISIONS MADE IN THE SUM OF RS.22,33,555/- , A SUM OF RS.11,93,115/- WAS PAID ON 30.09.2008 WHICH IS THE DUE DATE OF FILING THE RETURN OF INCOME FOR A.Y.2008- 09 AND ACCORDINGLY ATLEAST TO THAT EXTENT, THE ASS ESSEE IS ENTITLED FOR DEDUCTION U/S 43B OF THE ACT. THE LD. CIT(A) APPRECIATED THIS CONTENT ION OF THE ASSESSEE AND GRANTED RELIEF TO THE EXTENT OF RS.11,93,115/- AND UPHELD T HE ADDITION OF RS.10,40,440/- (RS.22,33,555/- - RS.11,93,115/-). AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND :- 4 THAT THE LD CIT(A) HAS ERRED AND NOT JUSTIFIE D IN DELETING THE DISALLOWANCES MADE ON ACCOUNT OF PROVISION FOR BONUS TO THE TUNE OF RS. 11,93,115/- 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE CATEGORICAL FACTUAL FINDI NGS GIVEN BY THE LD. CIT(A) IN ITS APPELLATE ORDER WERE NOT CONTROVERTED BY THE LD. DR BEFORE US. HENC E WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) . ACCORDINGLY GROUND NO.4 RAISED BY THE REVENUE IS DISMISSED. 19. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE ADMINISTRATIVE CHARGES ON PF AND PAYMENT OF BANKING CASH TRANSACTI ON TAX WOULD BE DISALLOWED IN THE SUM OF RS.10,06,732/- IN THE FACTS AND CIRCUMS TANCES OF THE CASE. ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 7 20. DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE LD. AO OBSERVED THAT THE ASSESSEE HAS DEBITED RS.4,03,717/- AND RS.6,03,015/ - IN ITS PROFIT AND LOSS ACCOUNT UNDER THE HEAD OTHER EXPENSES ON ACCOUNT OF ADMIN ISTRATIVE CHARGES ON PF AND BANKING CASH TRANSACTION TAX RESPECTIVELY. THE LD. AO DISALLOWED THE SAME ON THE GROUND THAT THEY ARE NOT ADMISSIBLE AS BUSINESS EXP ENSES. 21. ON FIRST APPEAL, THE ASSESSEE SUBMITTED THAT THE ASSESSEE PAID ADMINISTRATIVE CHARGES TO THE REGIONAL PROVIDENT FUND COMMISSIONER DURING THE FINANCIAL YEAR 2007- 08 RELEVANT TO A.Y.2008-09 AS PER THE PROVIDENT FUN D ACT AND HAD ALSO SUBMITTED THAT IF THE SAME NOT BEING PAID, THE EXEMPTION GRANTED T O THE CORPORATION TO MAINTAIN ITS TRUST MIGHT HAVE BEEN WITHDRAWN. 21.1. SIMILARLY THE ASSESEE HAS PAID BANKING CA SH TRANSACTION TAX TO BANKS WHICH IS NOTHING BUT THE TAX LEVIED BY THE BANK AUTHORITIES AND DEBITED TO THE BANK ACCOUNT OF THE ASSESSEE AUTOMATICALLY. THE LD. CIT(A) FOUND TH AT THE PAYMENT OF ADMINISTRATIVE CHARGES TO REGIONAL PROVIDENT FUND COMMISSIONER IS A STATUTORY PAYMENT AND ALSO FOUND THAT THE BANKING CASH TRANSACTION TAX INCURRE D BY THE ASSESSEE IS AN ALLOWABLE EXPENDITURE U/S 36(1)(XIII) OF THE ACT. ACCORDINGLY HE DELETED THE ADDITION MADE BY THE LD.AO. AGGRIEVED, THE REVENUE IS IN APPEAL BEFO RE US ON THE FOLLOWING GROUND :- 5 . THAT THE LD CIT(A) HAS ERRED AND NOT JUSTIFIED IN DELETING THE DISALLOWANCES MADE ON OF ADMINISTRATION CHARGES ON PF & BCTT DEBI TED TO THE P& L ACCOUNT TO THE TUNE OF RS. 10,06,732/-. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. FROM THE PERUSAL OF THE ORDER OF LD. CIT(A) ON THIS GROUND WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). AC CORDINGLY GROUND NO.5 RAISED BY THE REVENUE IS DISMISSED. 23. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. AO IS JUSTIFIED IN DELETING THE DISALLOWANCE ON ACCOUNT O F PROVISION OF LEAVE SALARY TO THE TUNE OF RS.9,39,47,285/- IN THE FACTS AND CIRCUMS TANCES OF THE CASE. ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 8 24. THE ASSESSEE MADE PROVISION FOR LEAVE ENCASHM ENT BASED ON ACTUAL VALUATION AT THE END OF THE FINANCIAL YEAR TO THE EXTENT OF RS.9 ,71,60,482/- AND PLEADED THAT THE SAME IS ALLOWABLE AS DEDUCTION AS IT IS AN ASCERTAI NED LIABILITY AND HAS PROVIDED BASED ON A SCIENTIFIC CALCULATION AND RATIONAL METHOD. TH E LD. AO DISALLOWED THE SAME ON THE GROUND THAT IT IS ONLY A PROVISION OF UNASCERTAINED LIABILITY. BEFORE THE LD. CIT(A) THE ASSESSEE PROVIDED A CHART AS BELOW :- OPENING BALANCE OF LEAVE SALARY PROVISION ON 1.04.2007 RS.9,39,47,285 ADD AMOUNT DEBITED TO ACCOUNTS DURING 2007-08 RS.1,47,44,577 LESS PAID DURING YEAR OUT OF PROVISION MADE RS.1,15,31,380 CLOSING BALANCE AS DISCLOSED TO NOTES RS.9,71,60,482 25. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO RS.32,13,197/- AND DIRECTED THE LD.AO TO VERIFY WHETHER THE LEAVE ENCASHMENT BENEFI T OF RS.115,31,380/- WAS ACTUALLY PAID BY THE ASSESSEE DURING THE YEAR AND IF SO THE ASSESSEE WAS ENTITLED TO GET THE RELIEF ACCORDINGLY. AGGRIEVED, THE REVENUE IS IN APPEAL BE FORE US ON THE FOLLOWING GROUND :- 6. THAT THE LD CIT(A) HAS ERRED AND NOT JUSTIFI ED IN DELETING THE DISALLOWANCES MADE ON ACCOUNT OF PROVISION FOR LEAVE SALARY TO TH E TUNE OF RS. 9,39,47,285/- 26. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE LD. CIT(A)S ORDER THAT TH E LD. CIT(A) HAD GIVEN DIRECTION TO THE AO TO VERIFY THE FACT OF ACTUAL PAYMENT OF RS.1 ,15,31,380/- TOWARDS LEAVE SALARY BENEFIT. FROM THE PERUSAL OF THE RECORDS WE ARE NOT CONVINCED AS TO WHAT IS THE AMOUNT THAT HAS BEEN DEBITED TO THE PROFIT AND LOSS ACCOUN T DURING THE YEAR AND WHAT THE AMOUNT ACTUALLY PAID BY THE ASSESSEE OUT OF THE PRO VISION FOR LEAVE ENCASHMENT MADE IN THE EARLIER YEARS. MOREOVER, WE ALSO FIND THAT T HIS ASPECT HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW IN THE LIGHT OF THE PROVISION OF SECTION N 43B(F) OF THE ACT WHICH IS REPRODUCED BELOW :- CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT 43B (F) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE, ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 9 SHALL BE ALLOWED IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONLY IN COMPUTING THE IN COME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUA LLY PAID BY HIM: 27. WE FIND THAT THIS PROVISION HAS BEEN INITIALL Y HELD TO BE UNCONSTITUTIONAL BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE IN DUSTRIES VS CIT REPORTED IN 292 ITR 470 (CAL). ON FURTHER APPEAL AGAINST THIS ORDER BY THE REVENUE BEFORE THE HONBLE SUPREME COURT, THE HONBLE APEX COURT INITIALLY ST AYED THE PROCEEDINGS OF THE HONBLE CALCUTTA HIGH COURT IN CC 12060/2008 DATED 8.9.2008 BUT LATER DURING LEAVE PROCEEDINGS IN CC 22889/2008 DATED 8.5.2009 HELD TH AT THE PROVISION OF SECTION 43B(F) OF THE ACT HAVE TO BE COMPLIED WITH BY THE A SSESSEE AS IF THE SAID PROVISION IS IN FORCE BUT AT THE SAME TIME DIRECTED THE ASSESSEE TO MAKE THE CLAIM OF THE SAME IN THE RETURN OF INCOME ON PROVISION BASIS. HOWEVER, THIS INTERIM DIRECTION OF THE HONBLE APEX COURT IS SUBJECT TO THE OUTCOME OF THE CIVIL A PPEAL BY THE HONBLE APEX COURT. IN THE LIGHT OF THE AFORESAID DIRECTIONS OF THE HON BLE SUPREME COURT, WE DEEM IT FIT AND PROPER, IN THE INTEREST OF JUSTICE AND FAIR PLA Y, TO SET ASIDE THIS ISSUE TO THE FILE OF THE LD. AO, TO DECIDE THIS ISSUE BASED ON THE FINAL OUTCOME OF THE SUPREME COURT IN THE AFORESAID CASE. THE LD. AO IS ALSO DIRECTED TO VERI FY THE VERACITY OF THE FIGURES MENTIONED IN THE CHART REPRODUCED HEREIN ABOVE. THE ASSESSEE IS AT LIBERTY TO PRODUCE ADDITIONAL EVIDENCES IN SUPPORT OF ITS CONTENTIONS. ACCORDINGLY GROUND NO.6 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 28. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. AO IS JUSTIFIED IN MAKING THE DISALLOWANCE ON ACCOUNT OF GRATUITY LIABILITY TO THE EXTENT OF RS.2,52,55,625/- IN THE FACTS AND CIRCUMSTANCES O F THE CASE. 29. THE ASSESSEE PROVIDED FOR GRATUITY IN THE SUM OF RS.2,52,55,625/- AND CLAIMED THE SAME AS DEDUCTION IN THE RETURN OF INCOME. THE LD. AO DISALLOWED THE SAME. BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE A. O. HAS DISALLOWED THE ABOVE AMOUNT BEING THE EXCESS PROVISION FOR GRATUITY LIABILITY FOR THE YEAR 2007-08 AS DISCLOSED IN TAR. AS PER COMPUTATION SHEET FURNISHED TO A.O. IN COURS E OF ASSESSMENT PROCEEDINGS, IT WAS CLEARLY POINTED OUT THAT, WHILE COMPUTATION OF LOSS FOR THE YEAR THE AMOUNT OF ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 10 RS.2,52,55,625/- WAS CONSIDERED AS INADMISSIBLE EXP ENSES AND HAS BEEN ADDED TO ITS ASSESSED INCOME AS PER RETURN FILED FOR THE YEAR. S O THIS ACTION OF ARBITRARY ADDITION WITHOUT CONSIDERING THE RETURN INCOME HAS RESULTED TO ADDITION OF SAME AMOUNT IN TWICE. AS PER PROFIT & LOSS ACCOUNT OF THE AMOUNT O F INCOME WAS RS.(-)13,74,99,766/- WHEREAS AS PER RETURN THE SAME WAS RS.(-)11,19,87,2 87, SO IT CLEARLY REFLECTS THAT EFFECT OF SUCH EXCESS PROVISION OF GRATUITY LIABILITY HAD ALREADY CONSIDERED TO ITS INCOME FOR THE YEAR. HENCE IT WAS ARGUED THAT THIS AMOUNT OF D ISALLOWANCE RS.2,52,55,625/- WAS TO BE ALLOWED TO THE CORPORATION. THE LD. CIT(A) HA D OBSERVED THE FOLLOWING IN HIS APPELLATE ORDER :- 10.3 I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE LD. A/R AND ALSO GONE THROUGH THE ASSESSMENT ORDER. DURING THE COURSE OF THE APPEAL, THE LD. A/R HAS STATED THAT THE APPELLANT COMPANY HAS ALREADY ADDED BACK THE DISAL LOWANCE OF RS.2,52,55,625/- ON ACCOUNT OF THE PROVISION FOR GRATUITY LIABILITY IN THE COMPUTATION SHEET FURNISHED TO THE A.O. THE LD. A/R HAS FURTHER EXPLAINED THAT THE A.O . SHOULD NOT DISALLOW THE SAME AMOUNT AGAIN AS IT HAS BEEN ALREADY DISALLOWED BY T HE APPELLANT IN ITS IN THE COMPUTATION OF INCOME. CONSIDERING THE FACTS OF THE CASE, I AM OF THE OPINION THAT THE SAME DISALLOWANCE SHOULD NOT BE MADE TWICE AS IT WOULD L EAD TO DOUBLE TAXATION. ACCORDINGLY, THE A.O. IS DIRECTED TO DELETE THE DISALLOWANCE OF RS.2,52,55,625/ - ON ACCOUNT OF. GRATUITY LIABILITY AFTER VERIFYING THE CONTENTION O F THE APPELLANT THAT THE SAME HAS ALREADY BEEN DISALLOWED IN ITS RETURN OF INCOME. FOR THE ST ATISTICAL PURPOSE, THIS GROUND OF APPEAL MAY BE TREATED AS ALLOWED. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND :- 7THAT THE LD CIT(A) HAS ERRED AND NOT JUSTIFIED IN DELETING THE DISALLOWANCES MADE ON ACCOUNT OF PROVISION FOR GRATUITY LIABILIT Y TO THE TUNE OF 2,52,55,625/- 30. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. FROM THE CATEGORICAL FINDING GIVEN BY THE L D.CIT(A) IN HIS APPELLATE ORDER, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CI T(A) ON THIS GROUND. ACCORDINGLY, GROUND NO.7 RAISED BY THE REVENUE IS DISMISSED. 31. IN THE RESULT THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. C.O.NO.95/KOL/2013 (BY THE ASSESSEE ) 32. THE LD. AR SUBMITTED THAT THE CROSS OBJECTION OF THE ASSESSEE ARE SUPPORTIVE OF THE ORDER OF THE LD. CIT(A). ACCORDINGLY THE SAME I S DISMISSED AS INFRUCTUOUS. ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 11 33. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSE D AS INFRUCTUOUS. ORDER PRONOUNCED IN THE COURT ON 25.05.2016. SD/- SD/- [MAHAVIR SINGH] [M.BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBE R DATE: 25.05.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . M/S. THE JUTE CORPORATION OF INDIA LTD., 15N, NELLI E SENGUPTA SARANI, 7 TH FLOOR, KOLKATA-700087. 2 THE D.C.I.T., CIRCLE-1, KOLKATA. 3 . THE CIT-I, KOLKATA, 4. THE CIT(A)-XXIV, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NO.1348/KOL/2013 & C.O.NO.95/KOL/ 2013 M/S. THE JUTE CORPORAT ION OF INDIA LTD.. A.YR.2008-09 12