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

ITA 1906/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0506 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 25-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MUKHERJEE A DDL C
• Assessee Lawyers: N C MONDAL FCA LD
• Keywords: Commercial expediency
• Section: 37

Judgement Text

1 I.T.A NO. 1906/KOL/2017 THE W.B. STATE CO - OP BANK LTD IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOLKATA BEFORE: SHRI M. BALAGANESH , ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 1906/ KOL/201 7 A.Y: 20 08 - 09 THE WEST BENGAL STATE VS. D.C.I.T, CIRCLE - 56, CO - OPERATIVE BANK LTD KOLKATA PAN: AAAAT7072N [APPELLANT] [RESPONDENT] FOR THE APPELLANT /ASSESSEE : SHRI N.C. MONDAL, FCA, LD.AR FOR THE RESPONDENT /DEPARTMENT : SHRI S. MUKHERJEE, A DDL.CIT, LD.DR DATE OF HEARING : 06 - 08 - 2018 DATE OF PRONOUNCEMENT : 12 - 0 9 - 201 8 ORDER SHRI S.S. VISWANETHRA RAVI , JM: TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), 1 2 , KOLKATA DT. 1 6 - 05 - 2017 FOR THE A.Y 20 08 - 09 . 2. THE ASSESSE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT ON 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 ADD ITION MADE BY THE LD. ASSESSING OFFICER UNDER THE HEAD 'BAKSHIS' OF RS.3,32,902/ - AND 'TIPS & BAKSHIS' OF RS.44,608/ - WHICH ARE ALLOWABLE EXPENSES UNDER SECTION 37 OF THE INCOME TAX ACT, 1961. 2. THAT ON FACTS OF THE CASE, THE LD. COMMISSIONER OF INCOME TA X (APPEALS) - 12, KOLKATA WAS WRONG BY NOT CONSIDERING THE FACT OF THE CASE AND EXPLANATION GIVEN BY THE APPELLANT THAT THE EXPENSES WERE IN THE NATURE OF SALARY/WAGES PAID AS BONUS DURING EID/DURGA PUJA FESTIVAL TO CASUAL STAFFS LIKE PEON, LIFT MAN, SECURIT Y STAFF ETC. EMPLOYED BY THE APPELLANT THROUGH ANOTHER SERVICE PROVIDER WHICH IS ALSO BEING A CO - OPERATIVE SOCIETY AND SUCH EXPENDITURES ARE VERY MUCH INCIDENTAL TO AND FOR THE PURPOSE OF CARRYING ON DAY TO DAY BUSINESS AND ALLOWABLE UNDER SECTION 37 OF TH E INCOME TAX ACT, 1961. 3. THAT YOUR PETITIONER RESERVES THE RIGHT TO PREFER FURTHER GROUND(S) AND/OR DELETE/MODIFY GROUND(S)/ARGUMENTS, SUBMIT DOCUMENTS BEFORE THE FINAL DISPOSAL OF THIS APPEAL. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD INCLUDING THE ORDER DT. 09 - 02 - 2018 IN ASSESSEES OWN CASE IN ITA NO. 1471/KOL/2016 FOR A.Y 2011 - 12 , WE FIND THAT THE ISSUE IN HAND IS COVERED BY THE SAID ORDER DT. 09 - 02 - 2018 IN FAVOUR OF ASSESSE AND 2 I.T.A NO. 1906/KOL/2017 THE W.B. STATE CO - OP BANK LTD AGAINST THE REVENUE . RELEVANT PORTION OF SAID ORDER IS R EPRODUCED HEREIN BELOW FOR BETTER UNDERSTANDING: - 7. AT THE TIME OF HEARING THE ID. COUNSEL FOR THE ASSESSEE FILED BEFORE US A COPY OF THE ORDER OF ITAT ' B' BENCH IN ASSESSEE'S OWN CASE FOR A.Y. IN ITA NO.7461K01J2013 ORDER DATED 30.11.2017. IN THE AFORE SAID ORDER THIS TRIBUNAL CAME TO THE CONCLUSION THAT ON IDENTICAL FACTS THAT THE EXPENDITURE WAS ALLOWABLE AS DEDUCTION. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL.: - '6. GROUND NO 2 AND 3 IS AGAINST THE DISALLOWANCE OF 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 ETE. DURING ANNUAL FESTIVALS LIKE DURGA PUJA AND EID. IT WA S SUBMITTED THAT THE PAYMENT IS IN THE NATURE OF EX - GRATIA / BONUS. THE BREAK - UP OF THESE PAYMENTS, AS MADE BY DIFFERENT BRANCHES OF THE BANK WAS GIVEN. THESE PAYMENTS WERE AUTHORISED BY APPROPRIATE RESOLUTIONS OF THE BOARD OF DIRECTOR OF THE BANK. THE ASSES SING OFFICER AS WELL AS THE LD. CIT (A) DID NOT ALLOW THIS EXPENDITURE ON THE GROUND THAT THERE WAS NO COMMERCIAL EXPEDIENCY BEHIND INCURRING THIS EXPENDITURE AND THAT THE EXPLANATION IS NOT SATISFACTORY. THE LD. COUNSEL FOR THE ASSESSEE THE DISALLOWANCE I S 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 WELL AS 44 BRANCHES SITUATED IN DIFFERENT PARTS OF WEST BENGAL. SUCH PAYMENTS ARE MADE AFTER DUE AUTHORIZATION FROM THE MANAGEMENT. THE REVENUE AUTHORITIES WERE WRONG IN COMING TO A CONCLUSION THAT THERE IS NO COMMERCIAL EXPEDIENCY IN MAKING THESE PAYMENTS. THE DISALLOWANCE ARBITRARILY UNJUSTIFIED. HENCE WE ALL OW THIS GROUND OF THE ASSESSEE. ' 8. THE DR POINTED OUT THAT NO EVIDENCE WHATSOEVER WAS FILED BEFORE THE A O . THEREFORE ORDER OF THE CIT(A) SHOULD BE SUSTAINED. THE ID. DR ALSO PLACED RELIANCE ON THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF CI T VS CALCUTTA AGENCIES 19 ITR 191 (SC). 9. WE HAVE PERUSED THE DECISION OF THE HON'BLE SUPREME COURT AND ARE OF THE VIEW THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE SAID DECISION ON THE JURISDICTION OF THE HON'BLE HIGH COURT IN A REFERENCE U/S 66(1) OF THE IT. ACT, 1962 AND WAS HELD TO BE ADVISORY IN NATURE. THE COURT HELD THAT ON FACTS THE DECISION OF THE TRIBUNAL IS FINAL UNLESS ITS CONCLUSION ARE BASED ON NO EVIDENCE. IN THE PRESENT CASE THE PLEA OF THE ASSESSEE IS BASED ON TH E EXISTING CUSTOMS AND PRACTICE PREVALENT FOR A LONG TIME. THIS WAS ACCEPTED BY THE TRIBUNAL IN AY2009 - 10. MOREOVER, THE VOUCHERS WERE FILED BEFORE THE CIT(A) WHICH WERE OMITTED TO BE CONSIDERED BY THE CIT(A). IN THESE CIRCUMSTANCE WE ARE OF THE VIEW THAT THE DECISION RENDERED BY THE TRIBUNAL ON IDENTICAL FACTS SHOULD BE FOLLOWED. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL WE DIRECT THAT THE IMPUGNED ADDITION MADE BY THE AO BE DELETED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED.' 4. T HE CO - ORDINATE BENCH, ITAT, KOLKATA IN ASSESSEES OWN CASE ON IDENTICAL ISSUE AND FACTS DIRECTED THE AO TO DELETE THE IMPUGNED ADDITION MADE BY AO. FOLLOWING THE SAME, WE SET ASIDE THE ORDER OF CIT - A AND DIRECT THE AO TO DELETE THE ADDITION OF RS.3,32,902/ - . GROUND NOS. 1 TO 3 RAISED BY THE ASSESSE ARE ALLOWED. 3 I.T.A NO. 1906/KOL/2017 THE W.B. STATE CO - OP BANK LTD 5 . IN THE RESULT, THE APPEAL OF ASSESSE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 - 0 9 - 2018 SD/ - SD/ - M. BALAGANESH S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 - 0 9 - 2018 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT / ASSESSEE : THE WEST BENGAL STATE CO - OPERATIVE BANK LIMITED, 24A WATERLOO STREET, KOLKATA - 700 069. 2 RESPONDENT / ASSESSEE : DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 56, 3 GOVT PLACE (WEST) 2 ND FLOOR, KOLKATA - 700 00 1. 3. THE CIT(A), 1 2 KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SENIOR PRIVATE SECRET ARY HEAD OF OFFICE, ITAT KOLKATA