M/S. RAJASTHAN STATE MINES & MINERALS LTD. , JAIPUR V. ADDL.CIT, RANGE-6, JAIPUR

ITA 213/JPR/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9119 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA JCIT DHK
• Keywords: Depreciation; Business expenditure; Maximum Marginal Rate; Set aside
• Section: 37(1); 80G; 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH VC A, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 213/JP/2020 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. M/S. RAJASTHAN STATE MINES & MINERALS LTD., KALANI & CO., CHARTERED ACCOUNTANTS, 5 TH FLOOR, MILESTONE BUILDING, GANDHINAGAR TURN, TONK ROAD, JAIPUR. CUKE VS. THE ADDL. CIT, RANGE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACR 7857 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30.07.2020. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/08/2020. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 11.12.2019 OF LD. CIT (A)-1, JODHPUR FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 5,76,340/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. 2. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 10,87,000/- ON ACCOUNT OF BUSIN ESS PROMOTION AND SOCIAL WELFARE EXPENSES. 2 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. 3. THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY A NY OF THE GROUNDS OF APPEAL. 4. THE APPROPRIATE COST BE AWARDED TO THE ASSESSE E. THE HEARING OF THE APPEAL WAS CONCLUDED THROUGH VID EO CONFERENCE DUE TO THE PREVAILING SITUATION OF COVID 19 PANDEMIC. GROUND NO. 1 IS REGARDING DISALLOWANCE OF PRIOR PE RIOD EXPENSES WHICH WAS CONFIRMED BY THE LD. CIT (A). 2. THE ASSESSEE COMPANY IS A GOVERNMENT OF RAJASTHA N ENTERPRISES AND ENGAGED IN THE BUSINESS OF MINING, PROCESSING AND TRADING OF M INERALS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH OCTOBER, 2007 DECLARING TOTAL INCOME OF RS. 98,38, 14,112/- WHICH WAS REVISED ON 30 TH MARCH, 2009 TO TOTAL INCOME OF RS. 98,34,77,175/-. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO NOTED THA T THE ASSESSEE HAS CLAIMED DEDUCTION FOR PRIOR PERIOD EXPENSES OF RS. 55,03,61 6/-. THE AO ASKED THE ASSESSEE TO EXPLAIN WHY THE CLAIM OF DEDUCTION ON PRIOR PERIOD EXPENSES SHOULD NOT BE DISALLOWED AS THE ASSESSEE HAS BEEN FOLLOWING THE MERCANTILE S YSTEM OF ACCOUNTING. IN REPLY, THE ASSESSEE EXPLAINED THAT OUT OF THE TOTAL AMOUNT OF RS. 55.04 LACS, A SUM OF RS. 18.87 LACS IS ON ACCOUNT OF DEPRECIATION WHICH THE ASSESS EE ITSELF HAS ADDED BACK IN THE COMPUTATION OF TOTAL INCOME. AS REGARDS THE REMAIN ING EXPENSES OF RS. 36.17 LACS, THE ASSESSEE HAS SUBMITTED THAT IT IS A STATE GOVERNMEN T UNDERTAKING WHERE THE RULES FOR PASSING THE VOUCHERS ARE VERY STRINGENT. THE PROCES S OF CLEARING THE BILLS AND VOUCHERS TAKES TIME BECAUSE IT IS CHECKED WHETHER THE CLAIM IS AS PER RULES OR NOT. THEREFORE, 3 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. THE APPROVAL OF THE APPROPRIATE AUTHORITY IS GRANTE D AFTER SOME TIME. THE ASSESSEE CLAIMED THAT SOME OF THE EXPENDITURES, APPROVAL OF WHICH HAVE BEEN GRANTED IN THE CURRENT YEAR AND THEREFORE, THE SAME ARE CLAIMED DU RING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS EXPLAINED THE REASONS FOR CLAIMING THESE EXPENSES ONE BY ONE UNDER EACH HEAD WHICH HAS BEEN REPRODUCED BY THE AO IN TH E ASSESSMENT ORDER. THE AO AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE A LLOWED THE CLAIM REGARDING PAYMENT TO THE CONTRACTORS OF RS. 30,34,372/- AND BONUS OF RS.3,655/- TOTAL AMOUNTING TO RS. 30,38,072/- OUT OF RS. 36,14,367/-. THUS THE AO HA S MADE A DISALLOWANCE OF RS. 5,76,340/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. ON APPEAL, THE LD. CIT (A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE AO. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS REITE RATED HIS CONTENTION AND EXPLANATIONS AS RAISED BEFORE THE AO AS WELL AS LD. CIT (A). THE SUBMISSIONS OF THE ASSESSEE HAS BEEN REPRODUCED BY THE LD. CIT (A) IN PARA 7.1 AS UNDER :- PARTICULARS AMOUNT (RS.) REASON ELECTRICITY EXPENSES 4,47,784/- THE AMOUNT WAS EXCESS PAID TO THE AVVN LIMITED IN APRIL 2004 AND PARKED AS ADVANCE IN THE BOOKS OF ACCOUNTS OF THE COMPANY WITH AN INTENTION THAT THE COMPANY WILL GET THE SUM RECEIVED BACK, HOWEVER AS THE COMPANY HAS NOT RECEIVED BACK THE MONEY MORE THAN 3 YEARS COMPANY HAS WRITE OFF THE EXPENSE. AS IT WAS DECIDED IN THE YEAR UNDER CONSIDERATION TO WRIT E OFF THE AMOUNT IT CANNOT BE CONSIDERED AS THE PRIOR PERIOD EXPENSE.(PBP PG. 16-22) 6,056/- PAYMENT WAS MADE TO THE CONTRACTOR ON THE BASIS OF BILL RAISED BY HIM FOR AN AMOUNT OF RS. 73,057/-. T HE SAID BILL INCLUDES ELECTRICITY CHARGES FOR THE PERI OD 01.04.2004 TO 31.03.2005 FOR AN AMOUNT OF RS. 6,056 /- 4 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. . SINCE THE BILL WAS RAISED BY THE PARTY DURING THE YEAR UNDER CONSIDERATION THEREFORE LIABILITY IN RESPECT OF THE EXPENSES ACCRUE AND ARISE IN THE CURRENT YEAR ONLY AND SAME CANNOT BE TREATED AS PRIOR PERIOD EXPENSE. (CO PY RELEVANT PAPERS ARE ENCLOSED PBP PG.23-14) PAYMENT TO CONTRACTORS 46,948/- PAYMENT WAS MADE TO M/S. SHUBHANGI MARKETING SERVICES FOR MARKETING EXPENSES. AS THE BILL WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION AND TH E SAME WAS APPROVED FOR PAYMENT DURING THE YEAR UNDER CONSIDERATION THEREFORE THE LIABILITY FOR EXPENSE I S CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION ON LY LAND HENCE THE EXPENDITURE SHOULD NOT BE TREATED AS PRIOR PERIOD EXPENSE. RESEARCH AND DEVELOPMENT EXPENSES 29,005/- THE AMOUNT CONSISTS OF 5 PETTY BILLS AMOUNTING TO R S. 1710/-, 1330/-, 4880/-, 18900/- AND RS. 2185/- BEIN G RECEIVED FOR PAYMENT AND APPROVED DURING THE YEAR UNDER CONSIDERATION. AS THE BILLS WERE RECEIVED DUR ING THE YEAR UNDER CONSIDERATION AND THE SAME WAS APPROVED FOR PAYMENT DURING THE YEAR UNDER CONSIDERATION THEREFORE THE LIABILITY FOR EXPENSE I S CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION ON LY AND HENCE THE EXPENDITURE SHOULD NOT BE TREATED AS PRIOR PERIOD EXPENSE. SALARY 22,674/- AMOUNT WAS PAID TO SH. HAJARI LAL JANGID, EX-XEN AGAINST PAY REVISION ARREAR FOR THE PERIOD 14.01.19 92 TO 13.10.1992. SINCE THE PAYMENT WAS APPROVED BY THE AUTHORITY ON 25.01.2007 THEREFORE IT IS CRYSTALLIZE D IN THE YEAR UNDER CONSIDERATION AND CANNOT BE REGARDED AS PRIOR PERIOD EXPENSES (COPY OF NOTE SHEET AND OT HER RELEVANT PAPERS IS ENCLOSED PB PG. 25 - 27) FREIGHT 11,000/- AS THE BILL WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION AND THE SAME WAS APPROVED FOR PAYMENT DURING THE YEAR UNDER CONSIDERATION THEREFORE THE LIABILITY FOR EXPENSE IS CRYSTALLIZED DURING THE YE AR UNDER CONSIDERATION ONLY AND HENCE THE EXPENDITURE SHOULD NOT BE TREATED AS PRIOR PERIOD EXPENSE. REPAIRS & MAINTENANCE OF PLANT AND MACHINERY 6,498/- AS THE BILL WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION AND THE SAME WAS APPROVED FOR PAYMENT DURING THE YEAR UNDER CONSIDERATION THEREFORE THE LIABILITY FOR EXPENSE IS CRYSTALLIZED DURING THE YE AR UNDER CONSIDERATION ONLY AND HENCE THE EXPENDITURE SHOULD NOT BE TREATED AS PRIOR PERIOD EXPENSE. 5 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. LEGAL AND PROFESSIONAL FEEWS 5,000/- AS THE BILL WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION AND THE SAME WAS APPROVED FOR PAYMENT DURING THE YEAR UNDER CONSIDERATION THEREFORE THE LIABILITY FOR EXPENSE IS CRYSTALLIZED DURING THE YE AR UNDER CONSIDERATION ONLY AND HENCE THE EXPENDITURE SHOULD NOT BE TREATED AS PRIOR PERIOD EXPENSE. GENERAL CHARGES 1,375/- PAYMENT WAS MADE TO M/S. MARUTI NANDAN BOOK BINDING AND CANNING CENTRE, JAISALMER FOR PHOTOCOPY EXPENSES. BILL WAS RAISED BY THE PARTY DURING THE Y EAR UNDER CONSIDERATION AND HENCE THE SAME WAS APPROVED FOR PAYMENT IN THE YEAR UNDER CONSIDERATION. SINCE THE BILL WAS PRESENTED AND APPROVED IN THE CURRENT YEAR THEREFORE THE EXPENSES CANNOT BE SAID TO BE PRIOR PERIOD IN NATURE. (COPY RELEVANT PAPERS ARE ENCLOSE D PB PG. 28-32) 5,76,340/- HE HAS FURTHER SUBMITTED THAT DUE TO THE REASONS OF VOUCHERS PERTAINED TO THE LAST MONTH OF THE PREVIOUS FINANCIAL YEAR AND ENTERED IN THE BOOKS OF ACCOUNT IN THE CURRENT FINANCIAL YEAR, THEREFORE, THESE EXPENSES WERE CLAI MED IN THIS YEAR AS PRIOR PERIOD EXPENSES. THE ASSESSEE HAS BEEN FOLLOWING A REGULA R SYSTEM OF ACCOUNTING AND ALL EXPENSES ARE ACCOUNTED FOR AFTER GETTING APPROVAL F ROM THE CONCERNED AUTHORITY. THE LD. A/R HAS RELIED ON THE DECISION OF THIS TRIBUNAL DATED 12.02.2016 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2010-11 AND 11-12. H E HAS FURTHER SUBMITTED THAT EVEN THE AO IN THE SET ASIDE PROCEEDINGS OF ASSESSMENT Y EAR 1995-96 ALLOWED THE CLAIM OF PRIOR PERIOD EXPENSES. HE HAS ALSO RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD., 358 I TR 295 (SC) AND SUBMITTED THAT WHEN THE RATE OF TAX REMAINED THE SAME IN THE YEAR UNDER CONSIDERATION AND IN THE PRECEDING 6 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. YEAR, THEN THERE IS NO REVENUE EFFECT. HE HAS ALSO RELIED UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF PR. CIT VS. R AJASTHAN STATE SEEDS CORPORATION LTD. 386 ITR 267 (RAJ.). 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE ASSESSEE HIMSELF HAS ADMITTED THE FACT THAT THESE ARE PRIOR PERIOD EXPEN SES NOT PERTAINING TO THE YEAR UNDER CONSIDERATION. THE AO HAS ALREADY ALLOWED THE MAJO R PART OF THE EXPENDITURES WHERE THE EXPLANATION OF THE ASSESSEE WAS REASONABLE AS T HE BILLS OF THE CONTRACTORS WERE APPROVED BY THE CONCERNED AUTHORITIES IN THE YEAR U NDER CONSIDERATION. THE REMAINING EXPENDITURE WHICH CLEARLY PERTAINS TO THE EARLIER Y EAR CANNOT BE ALLOWED OTHERWISE IT WILL BE VIOLATION OF RULES OF MERCANTILE SYSTEM OF ACCOU NTING AND EACH ACCOUNTING YEAR IS A SEPARATE UNIT. HE HAS RELIED UPON ORDERS OF THE AUT HORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE AO HIMSELF HAS ACCEPTED THIS FACT THAT THE BILLS AND VOUCHERS REQUIRE APPROVAL OF THE CONCERNED AUTHORITIES BEFORE THE PA YMENT IS MADE BY THE ASSESSEE COMPANY BEING A STATE GOVERNMENT ENTERPRISE. TO CH ECK THE MISUSE, MISAPPROPRIATION OF FUNDS, THERE ARE RULES FOR RELEASING OF PAYMENTS AND HENCE THE APPROVALS OF THE EXPENDITURES TAKE SOME TIME. THUS OUT OF THE TOTAL AMOUNT OF RS. 36.17 LACS, THE AO HIMSELF HAS ALLOWED A SUM OF RS. 30,38,072/- TOWARD S PAYMENT TO CONTRACTORS AND BONUS. THE AO HAS GIVEN THE REASONS FOR ALLOWING T HE EXPENDITURES THAT THE CLAIM OF ESCALATION AND HIGHER RATES WERE APPROVED BY THE AU THORITIES DURING THE YEAR UNDER CONSIDERATION, THEREFORE, THE EXPENDITURES CAN BE T REATED AS ALLOWABLE. WE FIND THAT AS 7 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. REGARDS THE OTHER ITEMS OF EXPENDITURE WHICH THE AO HAS DISALLOWED, THE ASSESSEE HAS EXPLAINED THE REASONS FOR CLAIMING THE SAID EXPENDI TURES FOR THE YEAR UNDER CONSIDERATION AS THE BILLS EITHER RECEIVED DURING T HE YEAR UNDER CONSIDERATION OR PAYMENTS WERE APPROVED DURING THE YEAR UNDER CONSID ERATION, THEREFORE, THE LIABILITY FOR THESE EXPENDITURES CRYSTALLIZED DURING THE YEAR UND ER CONSIDERATION. ONCE THESE FACTS ARE NOT DISPUTED BY THE AO THAT THE BILLS FOR EXPEN DITURES ARE FACTUALLY APPROVED DURING THE YEAR UNDER CONSIDERATION, CONSEQUENTLY THE EXPE NDITURES CRYSTALLIZED DURING THE YEAR AND THE SAME ARE ALLOWABLE EXPENDITURE. WE FURTHER NOTE THAT IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS PAYING THE TAX AT THE MAXIMUM MARGINAL RATE AND THERE IS NO CHANGE IN THE RATE OF TAX FOR THE YEAR UNDER CON SIDERATION IN COMPARISON TO THE PRECEDING YEAR. HENCE THE CLAIM OF EXPENDITURES FOR THE YEAR UNDER CONSIDERATION SHALL HAVE NO REVENUE EFFECT INSTEAD OF CLAIMING THE SAME IN THE PRECEDING YEAR. FURTHER, THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESS MENT YEAR 2010-11 AS WELL AS 2011- 12 HAS CONSIDERED THIS ISSUE AND DECIDED THE SAME I N FAVOUR OF THE ASSESSEE. FOR THE ASSESSMENT YEAR 2011-12 VIDE ORDER DATED 30 TH MAY, 2017, THE TRIBUNAL HAS DECIDED THIS ISSUE IN PARA 81.2 TO 81.3 AT PAGE 98 OF PAPE R BOOK AS UNDER :- 81.2 WE HAVE HEARD THE RIVAL CONTENTION, WE HAVE F IND THAT IN LD. CIT HAS GIVEN FINDING ON FACT IN PARA 6.1 AND 6.2 OF HIS ORDER AS UNDER:- 6.1 IN THIS YEAR, THE ASSESSEE HAS CLAIMED PRIOR PERIOD EXPENDITURE OF RS . 1,75,79,531/-. THIS ISSUE ALSO AROSE IN THE CAE OF APPELLANT IN AY 2010-11 AND EAR LIER YEARS. THE MAIN POINTS OF THE ASSESSMENT ORDER, ON THIS ISSUE, HAVE BEEN NARR ATED IN THE APPEAL ORDER OF CIT(A)-II, JAIPUR (APPEAL NO. 325/12-13, DATED 05.1 2.2013) FOR AY 2010-11. THE 8 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. MAIN POINTS OF THE SUBMISSIONS OF THE APPELLANT, ON THIS ISSUE, HAVE BEEN NARRATED THE ABOVE APPEAL ORDER. THEREFORE, THE ASSESSMENT O RDER AND THE SUBMISSIONS OF THE APPELLANT ARE NOT BEING AGAIN NARRATED IN THIS ORDER FOR THE SAKE OF BREVITY. IN AY 2010-11, THE CIT(A)-II, JAIPUR, HAS HELD AS UNDE R- FROM THE SUBMISSION OF THE APPELLANT IT IS CLEAR T HAT HONBLE ITAT, JAIPUR BENCH HAS BEEN ALLOWING PRIOR PERIOD EXPENSES IN TH E CASE OF VARIOUS GOVERNMENT UNDERTAKINGS IN THE YEAR IN WHICH SUCH E XPENSES ARE FINALLY SANCTIONED AND APPROVED. EVEN IN THE APPELLANTS OW N CASE THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT IN AY 2000- 01 BY HONBLE JAIPUR BENCH ITAT VIDE ORDER DATED 22-12-2006. MY PREDECES SORS HAVE ALLOWED PRIOR PERIOD EXPENSES IN ORDERS DATED 10.08.2011 IN AY 2008-09 AND 18.10.2012 IN AY 2009-10. RESPECTFULLY FOLLOWING HO NBLE ITATS ORDER IN THE CASE OF APPELLANT IN AY 2000-01 DATED 22-12- 2006 IN ITA NO. 600/JP/2003, THE AO IS DIRECTED TO DELETE THE ADDIT ION OF RS. 4,40,113 BECAUSE THE TABLE IN THE APPELLANTS SUBMISSION SHO WS THAT THE LIABILITY FOR THE EXPENSES GOT CRYSTALLIZED IN THE YEAR UNDER CON SIDERATION. 6.2 FOLLOWING THE ABOVE ORDER OF CIT(A)-II, JAIPUR AND THE ORDERS OF THE ITAT, JAIPUR, IN THE CASE OF THE ASSESSEE, THE ABOVE DISALLOWANCE IS DIRECTED TO BE DELETED. THIS GROUND IS ALLOWED. 81.3 THIS FINDING IS NOT CONTROVERTED BY THE REVENU E BY PLACING ANY CONTRARY MATERIAL ON RECORD AND ALSO NO CHANGE INTO FACTS AN D CIRCUMSTANCES IS POINTED OUT. THEREFORE, THIS GROUND OF THE REVENUES APPEAL IS D ISMISSED. THEREFORE, THIS ISSUE HAS BEEN CONSISTENTLY DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE. EVEN FOR THE ASSESSMENT YEAR 1995-96 THE TRIBUNAL SET ASIDE THIS ISSUE TO THE AO AND IN THE SET ASIDE PROCEEDINGS, THE AO HAS ALL OWED THE CLAIM VIDE ORDER DATED 27.07.2007. THE REASONS GIVEN BY THE AO WHILE ALLO WING THE CLAIM FOR THE ASSESSMENT YEAR 1995-96 IN THE SET ASIDE PROCEEDINGS ARE THAT THE EXPENDITURES ARE CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. THE RELEVANT PART OF THE ORDER OF THE AO IS REPRODUCED AS UNDER :- 9 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. REPLY OF THE ASSESSEE HAS BEEN EXAMINED AND FOUND TO BE ACCEPTABLE. BILLS & VOUCHERS OF THE EXPENSES NARRATED HAVE ALSO BEEN EXAMINED. SOME OF THEM WERE RAISED BY THE PARTIES IN THE YEAR UNDE R CONSIDERATION SOME WERE SETTLED IN THE YEAR UNDER CONSIDERATION, SO TH EY ARE FOUND TO BE CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. A S A MATTER OF FACT, IN PUBLIC SECTION UNDERTAKINGS THERE IS A LONG CHAIN O F TECHNICAL AND PROCEDURAL EXERCISE BECAUSE OF WHICH THE TIME LAG B ETWEEN THE INCURRENCE OF EXPENDITURE AND APPROVAL FOR SAME IS MUCH MORE A ND SOME TIMES STAGGERED IN TWO FINANCIAL YEARS. BUT THE BOTTOM LI NE IS THAT THE EXPENSES HAVE BEEN INCURRED AND THAT TOO FOR THE PURPOSE OF BUSINESS AND ARE ALLOWABLE. FURTHER THIS POSITION OF ALLOWABILITY OF PRIOR PERI OD EXPENSES IS SETTLED AND CLEAR IN THE ASSESSEES OWN CASE FOR THE A.Y. 1994- 95 AND 1995-96 BEFORE THE HON'BLE ITAT; AND THE DEPARTMENT HAS NOT GONE I N FURTHER APPEAL BEFORE THE HON'BLE HIGH COURT. ALSO IN CASES OF OTH ER PSUS VIZ RSEB, RIICO ETC., IT IS A SETTLED POSITION IN SO FAR AS T HE ALLOWABILITY OF PRIOR PERIOD EXPENSES ARE CONCERNED. THEREFORE, WHEN THE LIABILITY IS CRYSTALLIZED DURIN G THE YEAR UNDER CONSIDERATION AND THE ASSESSEE HAS BEEN REGULARLY AND CONSISTENTLY FOLLOW ING THE SAME METHOD OF ACCOUNTING AND SYSTEM OF APPROVAL OF THE PAYMENTS, THEN THE CL AIM OF EXPENDITURES WOULD NOT AFFECT THE TAX LIABILITY OF THE ASSESSEE. ACCORDIN GLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE EARLIER ORDER OF THIS TR IBUNAL, THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) IS DELETED. 10 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. GROUND NO. 2 IS REGARDING THE DISALLOWANCE OF BUSIN ESS PROMOTION AND SOCIAL WELFARE EXPENSES . 6. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED DEDUC TION OF RS. 10,87,000/- UNDER THE HEAD BUSINESS PROMOTION AND SOCIAL WELFARE EXPE NSES TOWARDS THE PAYMENTS MADE TO FEDERATION OF MINING ASSOCIATION OF RAJASTHAN, D ISTRICT POLICE WELFARE FUND, DISTRICT WEIGHT LIFTING ASSOCIATION, WEST ZONE CULTURE CENTR E, DISTRICT VIKAS SAMITI FOR CONSTRUCTION OF COMMUNITY CENTRE FOR POLICE DEPARTM ENT, ROSE SOCIETY, SANGEET PARISHAD, MAHILA SAMITI, GOVERNMENT ADARSH HIGHER P RIMARY SCHOOL. THE AO HAS DISALLOWED THE SAID AMOUNT OF RS. 10,87,000/- ON TH E GROUND THAT THESE EXPENSES ARE IN THE NATURE OF DONATION AND NOT INCURRED FOR THE PUR POSE OF BUSINESS OF THE ASSESSEE. THE ASSESSEE HAS NOT ESTABLISHED THAT THE BUSINESS OF THE ASSESSEE HAS DERIVED THE BENEFIT OUT OF THESE EXPENSES. THUS THE AO HELD TH AT THE AMOUNT HAS NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COU LD NOT SUCCEED. 7. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE INCURRED EXPENSES TOWARDS CONTRIBUTION TO FEDERATION OF MINI NG ASSOCIATION OF RS. 5,00,000/-. THE ASSESSEE IS A MEMBER OF THE FEDERATION WHICH HA S TO RAISE VARIOUS ISSUES AT VARIOUS FORUMS FOR THE BENEFIT OF MINING COMPANIES. THEREFO RE, THE SAID CONTRIBUTION IS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AS THE FEDERATI ON OF MINING ASSOCIATION IS LOOKING AFTER THE INTEREST OF MINING BUSINESS COMMUNITY. S IMILARLY, THE PAYMENT MADE TO DISTRICT POLICE WELFARE FUND IS ALSO BRINGS THE BEN EFIT OF MAINTAINING CORDIAL RELATIONS 11 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. WITH THE POLICE DEPARTMENT AND DISTRICT ADMINISTRAT ION. IN THE ACTIVITY OF MINING, THE ASSESSEE IS FACING TIME AND AGAIN THE SITUATION OF ACCIDENTS AND OTHER DESTRUCTIVE ACTIVITIES. THUS THE FORUM OF DISTRICT ADMINISTRATI ON AND POLICE IS VERY CRUCIAL IN THE SMOOTH RUNNING OF THE BUSINESS OPERATION OF THE ASS ESSEE. THE CONTRIBUTIONS TO WEIGHT LIFTING ASSOCIATION, CULTURAL CENTRES AND OTHER SOC IETIES AND SAMITIS AS WELL AS ACADEMY AND PARISHAD ARE TOWARDS PUBLICITY AND BUSINESS PRO MOTION OF THE ASSESSEE COMPANY. SUCH CONTRIBUTION WOULD ALSO BRING A GOOD REPUTATIO N AND IMAGE OF THE ASSESSEE IN THE SOCIETY AS WELL AS IN THE SOCIAL AND WELFARE ORGANI ZATIONS. THEREFORE, THE EXPENDITURES TOWARDS THE CONTRIBUTION TO THESE SOCIETIES, SAMITI S ETC. IS AN ALLOWABLE EXPENDITURE ON ACCOUNT OF PUBLICITY AND BUSINESS PROMOTION. EVEN OTHERWISE WHEN THE EXPENDITURE IS NOT AGAINST THE PUBLIC POLICY AND FOR WELFARE OF TH E SOCIETY AT LARGE, THEN IT IS IN THE BENEFIT OF THE BUSINESS ACTIVITY OF THE ASSESSEE. THE LD. A/R HAS FURTHER SUBMITTED THAT THE CONTRIBUTION MADE TO THESE ASSOCIATIONS, SAMITI S IS AN EXPENDITURE TOWARDS PUBLIC WELFARE WHICH IS CONNECTED WITH THE BUSINESS OF THE ASSESSEE AND CERTAINLY RESULT IN BENEFIT TO THE ASSESSEES BUSINESS AND, THEREFORE, IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF THE IT ACT. HE HAS RELIED UPON TH E JUDGMENT OF HONBLE SUPREME COURT IN CASE OF SRI VENKATA SATYANARAYANA RICE MILL CONT RACTORS CO. VS. CIT, 223 ITR 101 (SC). HE HAS ALSO REFERRED TO VARIOUS DECISIONS ON THIS POINT INCLUDING THE DECISION OF HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. MADRAS REFINERY LTD. 266 ITR 170 (MADRAS) AND DECISIONS OF THIS TRIBUNAL DATED 25.08 .2006 AND 31.03.2010 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1993-94 AND 2006- 07 RESPECTIVELY. HE HAS FURTHER SUBMITTED THAT A SIMILAR DISALLOWANCE WAS MADE IN T HE ASSESSMENT YEAR 2010-11 WHICH 12 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. WAS DELETED BY THE LD. CIT (A) AND THE ORDER OF THE LD. CIT (A) WAS UPHELD BY THIS TRIBUNAL VIDE ORDER DATED 12.02.2016. 8. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THESE EXPENDITURES ARE INCURRED TOWARDS CONTRIBUTION OR DONATION TO VARIOU S ORGANIZATIONS OR ASSOCIATIONS, SAMITIS, SCHOOLS ETC. THEREFORE, THIS IS NOT THE EX PENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE. A DO NATION GIVEN BY THE ASSESSEE IS A PENDING OF INCOME AND NOT AN EXPENDITURE INCURRED F OR EARNING OF INCOME. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE ASSESSEE HAS EXPLAINED THE REASONS FOR ALLOWABILITY OF THESE EXPENSES WHICH HAVE BEEN REPRODUCED BY THE AO AS UNDER :- S.NO. NAME OF PARTY AMOUNT IN RS. EXPLANATION 1. FEDERATION OF MINING ASSOCIATION OF RAJASTHAN 500000 ASSESSEE COMPANY IS A MEMBER OF THE FEDERATION OF MINING ASSOCIATION OF RAJASTHAN. THE OFFICE BEARERS OF THE RSMM FORMS PART OF THE EXECUTIVE COMMITTEE OF THE FEDERATION. ASSESEE HAS CONTRIBUTED RS.5.00 LACS TOWARDS THE PURCHASE OF OFFICER PREMISES OF THE FEDERATION. SINCE THE FEDERATION HELPS TO RAISE VARIOUS ISSUES AT DIFFERENT FORUMS FOR THE BENEFIT OF MINING COMPANIES THEREFORE THE EXPENDITURE IS NOT DONATION AND NEEDS TO BE ALLOWED. RELEVANT PAPERS ARE ENCLOSED AT PB PG.33-41 2. DISTRICT POLICE WELFARE 25000 PAYMENT IS MADE TOWARDS POLICE WELFARE FUND I N ORDER TO MAINTAIN CORDEAL RELATIONS WITH THE POLICE DEPARTMENT. IT IS ONLY THE INTEREST OF THE 13 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. FUND COMPANY TO MAINTAIN GOOD RELATIONS WITH THE DISTRICT ADMINISTRATION, HENCE EXPENSE SHOULD BE ALLOWED U/S 37(1). PB PG.42 3. DISTRICT WEIGHT LIFTING ASSOCIATION 10000 THE AMOUNT WAS PAID TOWARDS SPONSORSHIP OF TH E 38 TH STATE LEVEL SENIOR WEIGHT-LIFTING CHAMPIONSHIP (MAN AND WOMAN) AT THE LUV- KUSH INDOOR STADIUM DURING 12 TH TO 14 TH NOVEMBER '2006. HENCE THE PAYMENT IS TOWARDS THE PUBLICITY AND BUSINESS P ROMOTION OF THE COMPANY AND THEREFORE SAME IS ALLOWABLE U/S 37(1) OF THE INCOME TAX ACT, 1961. (COPY OF RELEVANT PAGES ARE ENCLOSED AT PB PG.43-44). 4. WEST ZONE CULTURE CENTRE 20000 WEST ZONE CULTURE CENTRE HAS ORGANIZED AN EVENT IN NAME OF UMANG UTSAV' TO HELP THE BLIND AND DEAF CHILDREN. ASSESSEE HAS GIVEN CONTRIBUTION OF RS. 20,000/- FOR THE SPONSORSHIP OF THE EVENT WHICH LEAD TO THE PUBLICITY OF THE COMPANY IS ALLOWABLE U/S 37(1) OF THE INCOME TAX ACT, 1961. (COPY OF RELEVANT PAGES ARE ENCLOSED AT PBP PG. 45-48). 5. JAISALMER VIKAS SAMITI 100000 PAYMENT WAS MADE TO JAISALMER VIKAS SAMIMIT FOR THE UPKEEP OF THE CITY. SUCH TYPE OF SOCIAL EXPENSES RESULT INTO THE PUBLICITY OF THE COMPANY, HENCE IT IS NOT DONATION RATHER ALLOWABLE EXPENSE U/S 37(1), (PB PG. 49) 6. SP UDAIPUR 250000 AMOUNT WAS PAID TO THE SP UDAI PUR FOR THE CONSTRUCTION OF COMMUNITY CENTRE FOR POLICE DEPARTMENT. PAYMENT WAS MADE TOWARDS POLICE WELFARE IN ORDER TO MAINTAIN CORDEAL RELATIONS WITH THE POLICE DEPARTMENT. IT IS ONLY THE INTEREST OF THE COMPANY TO MAINTAIN GOOD REL ATIONS WITH THE DISTRICT ADMINISTRATION, HENCE EXPENSE SHOULD BE ALLOWED U/S 37(1).(PB PG.50- 51) 7. RAJYA SAHITYA 50000 PAYMENT WAS GIVEN FOR THE SPONSORSHIP OF THE NATIONAL CONVENTION OF WRITERS HELD FROM 16.12. 14 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. ACADMEY 2006 TO 17.12.2006. SUCH PAYMENT RESULTS IN THE PUBLICITY OF THE COMPANY AND HENCE ARE ALLOWABLE U/S 37(1). (PB PG.50 & 52) 8. ROSE SOCIETY 50000 AMOUNT WAS PAID TO ROSE SOCIETY FOR SPONSORSHIP OF ROSE SHOW 2007 AT JAIPUR ON 21.01.2007. HENCE THE PAYMENT IS TOWARDS THE PUBLICITY AND BUSINESS PROMOTION OF THE COMPANY AND THEREFORE SAME IS ALLOWABLE U/S 37(1) OF THE INCOME TAX ACT, 1961. (COPY OF RELEVANT PAGES ALONG WITH NOTE SHEET ARE ENCLOSED AT PBP PG. 53-65). 9. MAHARANA KUMBHAS SANGIT PARISHAD 50000 AMOUNT WAS PAID TO PAISHAD FOR SPONSORSHIP OF 45 TH MAHARANA KUMBHA SANGEET SAMAROH ON 9 TO 11 TH MARCH' 2007 AT UDAIPUR. HENCE THE PAYMENT IS TOWARDS THE PUBLICITY AND BUSINESS PROMOTION OF THE COMPANY AND THEREFORE SAME IS ALLOWABLE U/S 37(1) OF THE INCOME TAX ACT, 1961. (COPY OF RELEVANT PAGES ALONG WITH NOTE SHEET ARE ENCLOSED AT PB PG 66-68). 10. MADHUBAN MAHILA SAMITI 22000 AMOUNT WAS PAID TO MADHUBAN MAHILA SAMITI FOR PURCHASE OF 2 CYCLE TROLLYS FOR THE COLLECTION OF GARBAGE FROM VARIOUS PLACES IN THE CITY. THE EXPENDITUREIS INCURRED FOR THE CLEANLINESS OF THE CITY. SUCH TYPE OF SOCIAL RESPONSIBILITY EXPENSES RESULT INTO THE PUBLICITY OF THE COMPANY, HENCE IT IS NOT DONATION RATHER ALLOWABLE EXPENSE U/S 37(1). (PBP PG. 69-73). 11. GOVERNMEN -T ADARSH HIGHER PRIMARY SCHOOL 10000 PAYMENT WAS GIVEN FOR THE SPONSORSHIP OF THE 50 TH DIVISIONAL LEVEL SPORTS TOURNAMENT. SUCH PAYMENT RESULTS IN THE PUBLICITY OF THE COMPANY AND HENCE ARE ALLOWABLE U/S 37(1) (PB PG. 74-76) TOTAL 1087000 15 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. THE AO HAS NOT ACCEPTED THE REASONS EXPLAINED BY TH E ASSESSEE, BUT HELD THAT THESE ARE IN THE NATURE OF DONATIONS AND NOT ALLOWABLE AS AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. WE FIND THAT THE GENUINENESS OF THE EXPENDITURE HAS NOT BEEN DISPUTED BY THE AO BUT IT IS DISALLOWED FOR THE REASON THAT NOT INCURRED FOR THE PURPOSES OF BUSINESS. THE ASSESSE E HAS PAID RS. 5,00,000/- AS CONTRIBUTION TO THE FEDERATION OF MINING ASSOCIATIO N OF RAJASTHAN TO WHICH THE ASSESSEE IS A MEMBER. THEREFORE, THE SAID CONTRIBUTION IS TO WARDS THE BUSINESS INTEREST OF THE ASSESSEE TO BE LOOKED AFTER BY THE FEDERATION BY RA ISING THE ISSUES AT VARIOUS FORUMS. THEREFORE, WE FIND THAT THIS EXPENDITURE CANNOT BE HELD TO BE INCURRED OTHER THAN BUSINESS PURPOSES. SIMILARLY, THE CONTRIBUTION MAD E TO DISTRICT POLICE WELFARE FUND AND TOWARDS CONSTRUCTION OF COMMUNITY CENTRE FOR POLICE DEPARTMENT, UDAIPUR, IS ULTIMATELY RESULT IN BENEFIT OF SMOOTH FUNCTIONING OF THE BUSI NESS OF THE ASSESSEE. WE FIND MERITS IN THE EXPLANATION OF THE ASSESSEE THAT THE ASSESSE E IN ITS DAY TO DAY BUSINESS ACTIVITY IS FACING VARIOUS UNTOWARD SITUATIONS OF ACCIDENTS AND OTHER INCIDENTS OF OBSTRUCTION IN THE MINING ACTIVITY BY SOME ORGANIZATIONS AND ANTI SOCI AL ELEMENTS ETC. THEREFORE, MAINTAINING A CORDIAL RELATIONS WITH THE POLICE DE PARTMENT AND DISTRICT ADMINISTRATION IS IN THE INTEREST OF BUSINESS OF THE ASSESSEE AND HEN CE THE SAID PAYMENT OF THE ASSESSEE FOR THE WELFARE OF THE POLICE DEPARTMENT, PARTICULA RLY COMMUNITY CENTRE AS WELL AS WELFARE FUND OF THE POLICE DEPARTMENT IS AN ALLOWAB LE EXPENDITURE HAVING REGARD TO THE NATURE OF BUSINESS ACTIVITY IN THE MINING FIELD WHI CH REQUIRES POLICE HELP FOR MAINTAINING LAW AND ORDER SITUATION AND UNINTERRUPTED FUNCTIONS OF THE ASSESSEE. SIMILARLY THE OTHER CONTRIBUTIONS TO THE VARIOUS SOCIETIES, SAMITIS AND SANGEET PARISHAD INCLUDING THE 16 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. GOVERNMENT ADARSH HIGHER PRIMARY SCHOOL FOR SPONSOR SHIP OF THE SPORTS TOURNAMENTS ARE CERTAINLY FOR THE PUBLICITY AND BUSINESS PROMOT ION OF THE ASSESSEE. EVEN OTHERWISE, SUCH TYPE OF CONTRIBUTIONS ARE PARTICIPATIONS OF TH E ASSESSEE AND MONETARY HELP IN CONDUCTING THE SOCIAL WELFARE ACTIVITY IN THE AREA WOULD BRING A GOOD REPUTATION AND IMAGE OF THE ASSESSEES BUSINESS WHICH IS NOTHING B UT A BUSINESS PROMOTION ACTIVITY OF THE ASSESSEE. ONCE THE EXPENDITURE INCURRED BY THE ASSESSEE HAS A NEXUS WITH THE INTEREST OF THE BUSINESS OF THE ASSESSEE AND FUNCTI ONING OF THE BUSINESS OF THE ASSESSEE, THEN THE SAME IS AN ALLOWABLE BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE IT ACT. THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESS MENT YEAR 2006-07 HAS CONSIDERED THIS ISSUE VIDE ORDER DATED 31.03.2010 IN PARA 9 AS UNDER :- 9. AFTER HEARING BOTH THE PARTIES, WE NOTED THAT AMOUNT OF RS. 14,650/- WAS PAID TO THE INSPECTOR GENERAL OF POLIC E, UDAIPUR RANGE FOR ASSISTANCE IN ORGANIZING TWO DAYS WORK SHOP ON HUMA N RIGHTS FOR POLICE OFFICERS AT RESERVE POLICE LINES ON 28-29 JANUARY 2 006 AND RS. 10,000/- TO WILD LIFE DEVELOPMENT SAMITI WHO EVERY YEAR CELE BRATES WILD LIFE WEEK FROM 1 ST OCTOBER TO 7 TH OCTOBER DURING WHICH IT ORGANIZES MANY COMPETITIONS AND OTHER EVENTS FOR SCHOOL STUDENTS. THOUSANDS OF STUDENTS OF DIFFERENT SCHOOLS PARTICIPATE IN THESE COMPETITI ONS AND WINNERS OF THE COMPETITIONS ARE AWARDED PRIZES. ASSESSEE HAS CONTR IBUTED RS. 10,000/- TOWARDS ORGANIZING SUCH WEEK WHICH IS IN THE AREA O F ITS OPERATIONS. SUCH EXPENDITURES ARE INCURRED BY THE ASSESSEE AS AN ECO NOMIC AND SOCIAL OBLIGATION OF THE COMPANY WHERE IT IS FUNCTIONING. INCURRING OF SUCH EXPENSES RESULTS IN THE MAINTAINING CO-ORDEAL RELAT IONSHIP WITH THE DISTRICT ADMINISTRATION INCLUDING FOREST AND POLICE DEPARTME NT. IT IS IN THE INTEREST OF THE COMPANY TO MAINTAIN GOOD RELATIONS WITH THE DISTRICT 17 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. ADMINISTRATION. SUCH SOCIAL EXPENDITURE INCURRED ON IMPLEMENTATION OF 20 POINT PROGRAMME WAS ALLOWED AS DEDUCTION IN CASE OF HPCL VS. DCIT 96 ITD 186 (MUM.). SIMILARLY EXPENDITURE ON BRINGING DRINKING WATER TO LOCALITY AND AIDING LOCAL SCHOOL WAS HELD ALLOWABLE DEDUCTION IN CASE OF LD. CIT VS. MADRAS REFINERY LIMITED 266 ITR 170 (MAD.) EXPENDITURE INCURRED ON CONSTRUCTION OF HOCKEY STADIUM ON GOVERNMENT LAN D BY A CIVIL CONTRACTOR WAS HELD AS ALLOWABLE BUSINESS EXPENDITU RE ON THE GROUND THAT IT WAS INCURRED TOWARDS PROMOTION OF ITS BUSINESS A ND FOR GENERATING THE GOODWILL IN CASE OF LD. CIT VS. VELUMANICKAM LODGE 32 DTR 246 (MAD.). RESPECTFULLY FOLLOWING THESE DECISIONS AND PRINCIPL ES LAID DOWN THEREIN, WE ARE OF THE VIEW THAT SMALL AMOUNT CONTRIBUTED TO AB OVE FUND / SAMITI BY THE ASSESSEE IN DISCHARGE OF ITS SOCIAL OBLIGATION IN THE AREA, WHERE IT IS FUNCTIONING, IS AN ALLOWABLE EXPENDITURE U/S 37(1). THE DISALLOWANCE CONFIRMED BY LD. CIT (A) IS THEREFORE DELETED. THE GROUND OF THE ASSESSEE IS THUS ALLOWED. FOR THE ASSESSMENT YEAR 2010-11, THE TRIBUNAL HAS A GAIN CONSIDERED THIS ISSUE VIDE ORDER DATED 12 TH FEBRUARY, 2016 IN PARA 10 TO 12.1 AS UNDER :- 10. ASSESSEE HAS DEBITED A SUM OF RS. 5,12,84,990/ - TO THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF DONATION. OUT OF WHICH, RS. 5,10,00,000/- WAS PAID TO CHIEF MINISTER RELIEF FUND ON WHICH DEDUCTI ON WAS CLAIMED U/S 80G @ 100%. THE REMAINING AMOUNT OF RS. 2,84,990/- WAS CLAIMED BY THE ASSESSEE U/S 37(1). IN RESPECT OF THE CLAIM OF DED UCTION, THE ASSESSEE HAS SUBMITTED THAT THOUGH THE PAYMENTS WERE DEBITED IN THE DONATION EXPENSES ACCOUNT BUT THESE ARE IN THE NATURE OF PUB LICITY AND SALES PROMOTION EXPENSES. HENCE THE SAME IS ALLOWABLE U/S 37(1). IN THE 18 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. ASSESSMENT YEAR 2006-07 HONBLE ITAT HAS ALLOWED TH E PAYMENT MADE BY THE ASSESSEE TO WILD LIFE DEVELOPMENT SAMITI AND TO THE INSPECTOR GENERAL OF POLICE FOR ORGANIZING THE ROAD SAFETY WEEK BY HO LDING THAT THE AMOUNT WAS PAID BY THE ASSESSEE IN DISCHARGE OF ITS SOCIAL OBLIGATION IN THE AREA AND THEREFORE ALLOWABLE U/S 37(1). 10.1. THE AO CONSIDERED THE SUBMISSION BUT COULD NO T FIND IT ACCEPTABLE. THE AO OBSERVED THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE THE BUSINESS EXPEDIENCY OF THE EXPENDITURE INCURRED TOWARDS SOCI AL WELFARE EXPENSES NEITHER HE EXPLAINED THAT WHAT BENEFIT IT HAD DERIV ED FROM INCURRING THESE EXPENSES. THE AO, THEREFORE, DISALLOWED THE CLAIM OF EXPENSES OF RS. 2,84,990/-. 11. ON APPEAL BEFORE LD. CIT (A), THE LD. CIT (A) D ELETED THE DISALLOWANCE AMOUNTING TO RS. 2,34,990/- BY HOLDING THAT THE SAME WERE CONTRIBUTIONS MADE FOR VARIOUS ACTIVITIES WHICH ALS O INVOLVED DISPLAY OF APPELLANTS BANNER AND THEREFORE THESE EXPENSES HAD ADVERTISEMENT AND PUBLICITY VALUE FOR THE APPELLANT. HOWEVER, THE LD. CIT (A) CONFIRMED THE DISALLOWANCE OF RS. 50,000/- IN RESPECT OF PAYMENT MADE TO ROSE SOCIETY BY RELYING ON THE DECISION OF HONBLE ITAT IN ASSES SEES OWN CASE FOR AY 2008-09 WHERE THE DISALLOWANCE MADE BY AO IN RESPEC T OF PAYMENT MADE TO ROSE SOCIETY WAS CONFIRMED BY HONBLE ITAT. 12. NOW THE REVENUE IS BEFORE US. 12.1. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL ON RECORD. AFTER GOING THROUGH THE ORDER OF THE LD. C IT (A), WE FIND NO INFIRMITY IN THE ORDER PASSED BY LD. CIT (A), THERE FORE, NO INTERFERENCE IS CALLED FOR. THUS THE GROUND OF THE REVENUE IS DISMI SSED. 19 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR. ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AS DISCUSSED ABOVE AS WELL AS THE VARIOUS DECISIONS RELIED UPON BY THE ASSESSEE I NCLUDING DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE, THE EXPENDITURES INCURRED BY T HE ASSESSEE UNDER THE HEAD BUSINESS PROMOTION AND WELFARE ACTIVITIES IS ALLOWE D. ADDITION MADE BY THE AO IS DELETED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 04/08/202 0. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 04/08/2020. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. RAJASTHAN STATE MINES & MIN ERALS LTD., JAIPUR. 2. THE RESPONDENT THE ADDL. CIT, RANGE-6, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 213/JP/2020) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 20 ITA NO. 213/JP/2020. RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR.