The West Bengal State Co-Operative Bank Ltd., Kolkata V. DCIT, CIR-56, KOLKATA, Kolkata

ITA 170/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1923 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K BANDHOPADHAY A DDL
• Assessee Lawyers: N C MONDAL
• Keywords: Commercial expediency
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONB LE SHRI A.T. VARKEY, JM ] I.T.A NO. 170/KOL/201 6 ASSESSMENT YEAR : 2010-1 1 WEST BENGAL STATE CO-OPERATIVE BANK LTD. -VS- DCIT, CIRCLE-56, KOLKATA [PAN: AAAAT 7072 N] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI N.C. MONDAL, FCA FOR THE REVENUE : SHRI A.K. BANDHOPADHAY, A DDL. CIT, SR. DR DATE OF HEARING : 13.12.2017 DATE OF PRONOUNCEMENT : 05.01.2018 ORDER PER J.SUDHAKAR REDDY, AM THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-12, KOLKATA [ IN SHORT THE LD CITA] DATED 10.12.2015 AGAINST THE ORDER PASSED BY THE DC IT, CIRCLE-56, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 14.03.2013 FOR THE ASSESSMENT YEAR 20 10-11 ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACTS OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 12, KOLKATA, WAS WRONG BY NOT CONSIDERING THE FACT OF THE CASE AND BY CONFIRMING THE ADDITION MADE BY THE LD. ASSESSING O FFICER UNDER THE HEAD BAKSHIS OF RS. 3,76,166/- AND TIPS & BAKSHIS OF RS. 66,400/- WHICH ARE ALLOWABLE EXPENSES UNDER SECTION 37 OF THE INCOME T AX ACT, 1961. 2 ITA NO.170/KOL/2016 WEST BENGAL STATE CO-OPERATIVE BANK LTD. A.YR .2010-11 2 2. THAT ON THE FACTS OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 12, KOLKATA WAS WRONG BY NOT CONSIDERING THE FACT O F THE CASE AND EXPLANATION GIVEN BY THE APPELLANT THAT THE EXPENSE S WERE IN THE NATURE OF SALARY/WAGES PAID AS BONUS DURING EID/DURGA PUJA FE STIVAL TO CASUAL STAFFS LIKE PEON, LIFT MAN, SECURITY STAFF ETC. EMPLOYED B Y THE APPELLANT THROUGH ANOTHER SERVICE PROVIDER WHICH IS ALSO BEING A CO- OPERATIVE SOCIETY AND SUCH EXPENDITURES ARE VERY MUCH INCIDENTAL TO AND FOR TH E PURPOSE OF CARRYING ON DAY TO DAY BUSINESS AND ALLOWABLE U/S 37 OF THE INC OME TAX ACT, 1961. 3. THAT YOUR PETITIONER RESERVES THE RIGHT TO PREFER F URTHER GROUND(S) AND/OR DELETE/MODIFY GROUND(S)/ARGUMENTS, SUBMIT DOCUMENTS BEFORE THE FINAL DISPOSAL OF THIS APPEAL. 2. AFTER HEARING THE RIVAL CONTENTIONS, WE FIND THA T THIS ISSUE COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE ASSESSEES OWN CASE IN I.T.A. NO. 746/KOL/2013 DATED 30.11.2013 WHEREIN IT WAS HELD AS UNDER: 6. GROUND NO 2 AND 3 IS AGAINST THE DISALLOWANCE O F EXPENDITURE OF AN AMOUNT PAID AS TIPS & BAKSIS BY THE BANK TO CASUAL WORKERS ON FESTIVE OCCASION. THE ASSESSEE SUBMITS THAT THESE PAYMENTS WERE MADE TO CASUAL WORKERS LIKE WATER BOYS, CANTEEN BOYS, SECURITY STAFFS ETC. DURI NG ANNUAL FESTIVALS LIKE DURGA PUJA AND EID. IT WAS SUBMITTED THAT THE PAYMENT IS IN THE NATURE OF EX- GRATIA/BONUS. THE BREAK-UP OF THESE PAYMENTS, AS MA DE BY DIFFERENT BRANCHES OF THE BANK WAS GIVEN. THESE PAYMENTS WERE AUTHORISED BY APPROPRIATE RESOLUTIONS OF THE BOARD OF DIRECTOR OF THE BANK. THE ASSESSIN G OFFICER AS WELL AS THE LD. CIT (A) DID NOT ALLOW THIS EXPENDITURE ON THE GROUN D THAT THERE WAS NO COMMERCIAL EXPEDIENCY BEHIND INCURRING THIS EXPENDI TURE AND THAT THE EXPLANATION IS NOT SATISFACTORY. THE LD. COUNSEL FO R THE ASSESSEE THE DISALLOWANCE IS BAD IN LAW THE ASSESSEE HAS PRODUCED SUFFICIENT EVIDENCE IN THE FORM OF VOUCHERS AND RECEIPTS IN EVIDENCE OF ANY PAYMENT OF TIPS & BAKSIS. PAYMENTS WERE MADE BY THE HEAD OFFICE, REGIONAL OFFICES AS W ELL AS 44 BRANCHES SITUATED IN DIFFERENT PARTS OF WEST BENGAL. SUCH PAYMENTS AR E MADE AFTER DUE AUTHORIZATION FROM THE MANAGEMENT. THE REVENUE AUTH ORITIES WERE WRONG IN COMING TO A CONCLUSION THAT THERE IS NO COMMERCIAL EXPEDIENCY IN MAKING THESE PAYMENTS. THE DISALLOWANCE ARBITRARILY UNJUSTIFIED. HENCE WE ALLOW THIS GROUND OF THE ASSESSEE. 3 ITA NO.170/KOL/2016 WEST BENGAL STATE CO-OPERATIVE BANK LTD. A.YR .2010-11 3 RESPECTFULLY FOLLOWING THE SAME, WE ALLOW BOTH THE GROUNDS FILED BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 05.01.2018 SD/- SD/- [A.T.VARKEY] [ J.SUDHAKA R REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 05.01.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE WEST BENGAL STATE CO-OPERATIVE BANK LTD. 24A , WATERLOO STREET, KOLKATA-700069. 2. DCIT, CIRCLE-56, KOLKATA, 3, GOVT. PLACE (WEST), SECOND FLOOR, KOLKATA-700001. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S