M/s S.S. Crop Care Limited, Bhopal V. THE JCIT RANGE-3, Bhopal

ITA 243/IND/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2284 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 17-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: N D PATWA

Judgement Text

SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIB UNAL INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .../ I.T.A. NO. 243/IND/2016 / ASSESSMENT YEAR: 2011-12 S.S. CROP LIMITED BHOPAL PAN AACCS-1450P :: / APPELLANT VS. DY. COMMISSIONER OF INCOME TAX 5(1) BHOPAL :: ! / RESPONDENT .../ I.T.A. NO. 197/IND/2016 / ASSESSMENT YEAR: 2011-12 DY. COMMISSIONER OF INCOME TAX 5(1) BHOPAL :: / APPELLANT VS. S.S. CROP CARE LTD. BHOPAL :: ! / RESPONDENT '# $ % & / REVENUE BY SHRI MOHD. JAVED '( $ % & / ASSESSEE BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA ) * $ (+ DATE OF HEARING 31.3.2017 ,-./ $ (+ DATE OF PRONOUNCEMENT 0 3 . 5 .2017 SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 2 / O R D E R PER SHRI C.M. GARG, JM THESE ARE THE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE FIRST LEARNED CIT(A), BHOP AL-2, DATED 18.1.2016 IN FIRST APPEAL NO. CIT A(2)/BPL/IT-187/2 014-15 FOR THE ASSESSMENT YEAR 2011-12. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE-APP ELLANT READ AS UNDER :- (I) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN ALLOWING THE RELI EF OF RS.78,73,790/- ONLY OUT OF THE TOTAL ADDITION OF RS.83,96,574/- AND THEREBY CONFIRMING THE ADDITION OF RS. 5,22,784/- ON ACCOUNT OF CASUAL LABOUR WITHOUT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE A ND WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE MAINTAINS REGULAR AND PROPER BOOKS OF ACCOUNTS AND THE EXPENSES OF CASUAL LABOUR ARE FULLY SUPPORTED B Y PROPER VOUCHER. (II) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN GIVING THE RELIEF OF RS.8,02,800/- OUT OF THE TOTAL EXPENSES CLAIMED RS.13,02,800/- UNDER THE HEAD FOREIGN TRAVEL EXPENS ES WITHOUT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE AND WITHOUT C9ONSIDERING THE FACT THAT THE EXPENSES INCURRED FOR FOREIGN TRAVELLING ARE FOR BU SINESS PURPOSES ONLY AND THERE IS NO PERSONAL ELEMENT IN T HIS EXPENDITURE. THUS, THE ORDER PASSED BY THE LEARNED CIT CONFIRMING THE ADDITION OF RS. 5,00,000/- IS UNJUST AND UNFAIR. SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 3 THE GROUNDS OF APPEAL RAISED BY THE REVENUE-APPELLA NT READ AS UNDER :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING T HE DISALLOWANCE OF THE CASUAL LABOUR EXPENSES TO RS.5,22,784/- OUT OF EXPENSES RS.83,96,574/- WHICH IS 6% OF THE SAID EXPENSES AS AGAINST 38% SUSTAINED IN A.Y. 2007-08 WHEN THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE GENUINENESS OF THE SAID CLAIM. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID CIT(A) WAS JUSTIFIED IN RESTRICTING TH E DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF THE DIRE CTORS TO RS.5,00,000/- OUT OF RS. 13,02,800/- INSTEAD OF RS.8,02,800/- DISALLOWED BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS NARRATED BY THE ASSESSING OFFICER. 3. GROUND NO. (I) OF THE ASSESSEE AND REVENUE RELAT ES TO CASUAL LABOUR EXPENSES. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.1,29,62,637/- FOR LABOUR AND WAGES. TH E ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBSTANT IATE ITS CLAIM. THE ASSESSEE VIDE ITS REPLY DATED 27.11.2013 SUBMIT TED COPY OF LEDGER ACCOUNT OF LABOUR AND WAGES. ON GOING THROUG H THE LEDGER ACCOUNTS, THE ASSESSING OFFICER NOTICED THAT THE AS SESSEE HAS DEBITED THE AMOUNT OF RS.45,66,063/- FOR PERMANENT LABOUR AND RS.83,96,574/- FOR CASUAL LABOUR. THE ASSESSING OFF ICER ALSO SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 4 FOUND THAT ON PERMANENT LABOUR THE ASSESSEE COMPANY IS PAYING ESIC, PF, ETC. WHEREAS FOR CASUAL LABOUR, NO SUCH S TATUTORY PAYMENTS WERE MADE. THE ASSESSING OFFICER AGAIN ASK ED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM FOR CASUAL LABOU R AS THE SAID PAYMENTS WERE MADE IN CASH WHICH WERE ALSO NOT IN PROPORTION WITH THE MANUFACTURING. IN RESPONSE THE ASSESSEE PR ODUCED MUSTER ROLL FOR CASUAL LABOUR WITH THE SUBMISSION T HAT EXCEPT MUSTER ROLL, NO OTHER LEDGER OR VOUCHERS ARE MAINTA INED FOR CASUAL LABOUR PAYMENTS WHICH WERE MADE IN CASH. ON VERIFICATION OF THE CLAIM OF THE ASSESSEE, THE ASSE SSING OFFICER OBSERVED AS UNDER :- (A) ALL PAYMENTS FOR CASUAL LABOUR, ETC. ARE MADE I N CASH BY THE COMPANY. ONLY MUSTER ROLL IS MAINTAINED FOR SUCH PAYMENTS. THE ASSESSEE ITSELF HAS AGREED THAT NO OTHER LEDGER OR VOUCHERS ARE MAINTAINED FOR SUCH PAYMENTS. (B) THE COMPANY IS PAYING ESIC, PF ETC. FOR PERMANE NT LABOUR BUT NO SUCH STATUTORY PAYMENTS ARE MADE FOR CASUAL LABOURS. THE PROVISIONS OF PF, ESIC ACTS ARE SUCH THAT THE ASSESSEE HAS TO MAKE SUCH PAYMENTS. (C) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED MONTHWISE DETAILS OF CASUAL LABOUR PAYMENT VIS A VIS MONTHWISE AS UNDER :- SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 5 MONTH PRODUCTION(MT) CASUAL LABOUR LABOUR COST PER MT APRIL 921.865 3,06,170 332.12 MAY 808.535 6,89,715 853.04 JUNE 1086.082 8,46,835 779.72 JULY 1350.092 12,62,139 934.23 AUG 717.425 7,22,456 1007.01 SEPT. 277.379 4,20,649 1511.06 OCT 142.233 5,62,980 3958.15 NOV 174.437 5,78,340 3315.46 DEC 165.538 5,58,420 3373.36 JAN 643.461 7,69,800 1196.34 FEB 946.655 8,27,090 873.69 MARCH 643.081 8,51,980 1314.84 ON GOING THROUGH THE ABOVE TABLE ONE INTERESTING PO INT CAN VERY WELL BE NOTICED THAT WHEN PRODUCTION IS 92.865 MT LABOUR IS 3,06,170/- WHEREAS WHEN PRODUCTION IS 174.437 LABOUR IS 5,78,340/- MEANING THEREBY THAT LESS PRODUCTION BUT LABOUR IS MORE WHI CH IS NOT POSSIBLE AT ALL. FROM ABOVE TABLE IT CAN VER Y WELL BE SEEN THAT THERE IS NO SYSTEM OF PAYMENT OF LABOU R IN COMPARISON TO PRODUCTION. THE REASON FOR SUCH DISCREPANCY IN PAYMENT VIS A VIS PRODUCTION HAS NOT BEEN CLARIFIED BY THE ASSESSEE. IT IS WELL KNON THA T IF LABOUR PAYMENT IS HIGHER PRODUCTION WILL ALSO BE HI GH BUT REVERSE IS THE CASE OF THE ASSESSEE. IT SEEMS T HAT THE ASSESSEE HAS DEBITED THE LABOUR AS PER AVAILABI LITY OF CASH IN ITS BOOKS OF ACCOUNTS. WHEN CASH IN HAND IS MORE, HIGHER LABOUR HAS BEEN DEBITED AND VISE VERSA . (D) IN THE ASSESSMENT YEAR 2007-08 DISALLOWANCE OF RS.3,50,000/- WAS MADE OUT OF CASUAL LABOUR CHARGES WHICH WAS SUBSEQUENTLY ENHANCED BY THE CIT(A)-II, BHOPAL TO RS.38,84,778/- VIDE ORDER NO. CIT(A)- II/BHOPAL/IT-185/09-10 DATED 23.01.2012 AFTER LOOKING INTO THE DEFECTS IN CLAIM OF THE ASSESSEE. THE SAID ENHANCED ADDITION WAS FURTHER MAINTAINED AT RS.19,42,389/- BY THE ITAT VIDE ORDER NO. 401/IND/2012 DATED 11.02.2013. THE ORDER OF THE SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 6 ITAT WAS FURTHER MAINTAINED BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE ORDER NO. 79/2013. (E) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED FEW PAGES OF MUSTER ROLL. ON GOING THROUGH THE SAID MUSTER ROLL PAGES, IT IS SEE N THAT SOME OF THE SIGNATURES OF THE WORKERS DOES NOT MATC H WITH THAT SIGNED IN ONE PAGE TO SIGNATURE ON OTHER PAGE. FOR EXAMPLE SHRISANTOSH GIRI, SHRI RAJESH, ET C. (F) IN THE MUSTER ROLL OF CASUAL LABOUR THERE IS CO LUMN FOR ESIC BUT NO AMOUNT IS FILLED IN THAT AS THE SAME HA S NOT BEEN PAID BY THE ASSESSEE COMPANY. 4. KEEPING IN VIEW THE REASONS MENTIONED ABOVE AND THE ORDER OF THE ITAT, IN THE ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2007-08 WHICH WAS AFFIRMED BY THE HON'BLE JURISDICT IONAL HIGH COURT VIDE ORDER NO. 79/2013, THE ASSESSING OFFICER HELD IT IS CLEAR THAT THE CASUAL LABOUR DEBITED BY THE ASSESSE E IS NOT GENUINE. THE LEARNED ASSESSING OFFICER, THEREFORE, DISALLOWE D RS.85,96,574/- AND ADDED THE SAME TO THE TOTAL INCO ME OF THE ASSESSEE. 5. HAVING BEEN AGGRIEVED WITH THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFO RE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSI ONER OF INCOME TAX (APPEALS), AFTER CONSIDERING THE FACTS A ND SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 7 CIRCUMSTANCES OF THE CASE, IN THE LIGHT OF THE MATE RIAL AVAILABLE ON RECORD, HELD AS UNDER :- 5.5 UPON DUE CONSIDERATION OF THE FOREGOING F ACTS, THE ACTION OF THE A.O. IN DISALLOWING 100% OF THE C ASUAL LABOUR EXPENDITURE CANNOT BE UPHELD. TAKING INTO ACCOUNT THE EXPENDITURE UNDER THIS HEAD CLAIMED/ALLOWED IN VARIOUS ASSESSMENT YEARS, IT WOU LD BE REASONABLE TO ALLOW EXPENDITURE UNDER THE HEAD LABOUR AND WAGES @ 27% OF THE JOB WORK RECEIPTS OFR S. 4,60,72,531/- I.E. AT RS.1,24,39,853/-. OUT OF THIS , PERMANENT LABOUR IS RS.45,66,063/- ABOUT WHICH THER E IS NO DISPUTE. THE REMAINING EXPENDITURE ON CASUAL LABOUR THUS WOULD BE RS.78,73,790 WHICH IS ALLOWED. ADDITION OF RS.5,22,784 (RS.83,96,574 (-) RS.78,73,790) IS UPHELD OUT OF THE ADDITION OF RS.83,96,574/- MADE BY THE A.O. 6. BEING AGGRIEVED WITH THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN APPEAL AGA INST PART MAINTENANCE OF ADDITION WHEREAS THE REVENUE IS IN A PPEAL AGAINST THE RELIEF GRANTED TO THE ASSESSEE. SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 8 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WAS N OT JUSTIFIED IN MAINTAINING THE ADDITION OF RS.5,22,784/- TOWARD S CASUAL LABOUR CHARGES. THE LEARNED COUNSEL FOR THE ASSESSE E FURTHER SUBMITTED THAT NO SPECIFIC DISCREPANCY IN CASH PAYM ENTS HAS BEEN POINTED OUT BY THE ASSESSING OFFICER AND THE A SSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD IN SUPPOR T OF HIS CLAIM THAT THE ASSESSEE HAS DEBITED THE LABOUR CHARGES AS PER AVAILABILITY OF CASH IN ITS BOOKS OF ACCOUNTS. HE, THEREFORE, SUBMITTED THAT ADDITION SUSTAINED BY THE COMMISSION ER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED AND DESERVES TO BE DELETED. 8. ON THE OTHER HAND, THE LEARNED DR WHILE STRONGLY RELYING UPON THE ASSESSMENT ORDER, SUBMITTED THAT ALL THE P AYMENTS TO CASUAL LABOURERS ARE MADE IN CASH AND ARE NOT VERIF IABLE. HE FURTHER SUBMITTED THAT ON PERMANENT LABOUR, THE ASS ESSEE COMPANY IS PAYING ESIC, PF, ETC. WHEREAS FOR CASUAL LABOUR, NO SUCH STATUTORY PAYMENTS WERE MADE AND THE PAYMENTS ARE NOT IN PROPORTION TO MONTHLY PRODUCTION. THE LEARNED DR BROUGHT TO OUR NOTICE THAT EXCEPT MUSTER ROLL, NO OTHER LEDGER OR VOUCHERS ARE MAINTAINED FOR CASH PAYMENTS AND THE SIGNATURES OF CASUAL SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 9 LABOURERS ARE DIFFERENT ON DIFFERENT PAGES, WHICH I S A CLEAR PROOF IN ITSELF THAT THE LABOUR PAYMENTS MADE IN CASH ARE BOGUS. THE LEARNED DR FURTHER SUBMITTED THAT BEFORE MAKING THE DISALLOWANCE, THE ASSESSING OFFICER HAS GIVEN DETAI LED REASONS THEREFOR AND AS SUCH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DESERVES TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAINTAINED. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES IN THE WAKE OF THE FACTS AND THE MATERIAL A VAILABLE ON RECORD. AT THE VERY OUTSET FROM THE ORDER OF THE I TAT, INDORE BENCH, DATED 11.2.2013 PASSED IN THE ASSESSEES OWN APPEAL IN ITA NO. 401/IND/2012 FOR THE ASSESSMENT YEAR 2007-0 8, WE OBSERVE THAT THE TRIBUNAL GRANTED PART RELIEF TO TH E ASSESSEE WITH THE FOLLOWING OBSERVATIONS :- AS PER THE ASSESSING OFFICER, THE ASSESSEE DULY MA INTAINED THE VOUCHERS OF PAYMENT AND WAGES SO FAR AS THE STAFF MENTIONED IN COLUMN NOS. 1 TO 3 OF THE ABOVE CHART WHEREAS NO SUCH ACCOUNT WAS MAINTAINED FOR SR. NO. 5(CASUAL WORKER/LABOUR). THE ASSESSING OFFICER OBSERVED THAT NO CASUAL WORKERS/LABOURARE NORMALLY EMPLOYED FOR HAZARDOUS I NDUSTRY. THUS, A LUM SUM DISALLOWANCE OF RS. 3,50,000/- WAS MADE BY THE ASSE SSING OFFICER. THERE IS AN OBSERVATION IN THE IMPUGNED ORDER ALSO THAT SOME CA SUAL STAFF MAY BE DEPLOYED FOR NON-HAZARDOUS FUNCTION LIKE LOADING, UNLOADING, THUS THE AMOUNT OF RS.12 LACS WAS ALLOWED OUT OF RS.50,84,778/- AND THE BALA NCE AMOUNT OF RS.38,84,778/- WAS UPHELD. THE ASSESSEE IS A LIMITE D COMPANY, MAINTAINS PROPER BOOKS OF ACCOUNTS AND VOUCHERS AND THE ACCOUNTS ARE AUDITED U/S 44AB OF THE ACT AS WELL AS COMPANIES ACT. EVEN BOTH THE AUTHORI TIES HAVE MENTIONED THAT SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 10 PROPER REGISTERS ARE MAINTAINED FOR REGULAR EMPLOYE ES/WORKERS AND EPS AND ESIC CONTRIBUTIONS ARE ALSO PROPERLY DEDUCTED. THE ASSESSING OFFICER MADE A LUMP SUM DISALLOWANCE ON AD HOC BASIS BUT NO SPECIF IC AMOUNT WAS POINTED OUT AND REASONING FOR SUCH DISALLOWANCE. IF THE TOTALS OF WORK RECEIPTS AND THE DIRECT EXPENDITURE AS SUMMARISED IN THE AFORESAID TABLE NO . 1, WE FIND 6 THAT REASONABLE EXPENDITURE HAS ALREADY BEEN DISALLOWED. IF THE ISSUE/EXPENSES ARE ANALYSED WITH RESPECT TO GROSS PROFIT, WE FIND THAT IT IS IN THE INCREASING TREND AS THE NET PROFIT FOR THE A.Y. 2005-06 WAS RS. 16,14,7 41/-, RS.15,87,642/- (A.Y. 2006-07) AND RS. 54,05,901/- (A.Y. 2007-08). IF THI S PROFIT IS ANALYSED IN TERMS OF PERCENTAGE, IT ROSE TO 23.83% (A.Y. 2007-08) IN COM PARISON TO 9.52% FOR THE A.Y. 2005-06. SO FAR AS NON-EMPLOYMENT OF CASUAL WORKER IN HAZARDOUS INDUSTRY IS CONCERNED, THE LEARNED COUNSEL INVITED OUR ATTENTIO N TO A LETTER NO. 986 DATED 8.12.2011 (PAGE 54 OF THE PAPER BOOK) ISSUED BY JOI NT CONTROLLER, INDUSTRIAL HEALTH AND SAFETY, BHOPAL, MENTIONING THAT THERE IS NO SUCH RESTRICTION OF KEEPING CASUAL LABOUR IN PESTICIDE FORMULATION INDU STRIES. THE WHOLE DISPUTE PERTAINS TO THE PAYMENT MENTIONED AT SL. NO. 5 OF T ABLE NO. 2. IF THIS ISSUE IS ANALYSED WITH RESPECT TO NET PROFIT, AS MENTIONED E ARLIER, IT IS REASONABLY IN GOOD INCREASING TREND. AT THE SAME TIME, THE ASSESSEE IS EXPECTED TO MAINTAIN THE RECORD OF CASUAL LABOUR ALSO BECAUSE NO PAYMENT IS MADE IN THE AIR AND AT LEAST TO THE SATISFACTION OF THE ASSESSING OFFICER, SOME RECORD WAS EXPECTED TO BE MAINTAINED FOR CASUAL LABOUR ALSO. IF WE SEND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER, THE ASSESSEE WILL BE ENTANGLED I N FURTHER LITIGATION CAUSING UNDUE HARDSHIP, THEREFORE, 7 TO REDUCE LITIGATION A ND TO CUT SHORT THE MATTER, KEEPING IN VIEW THE INCREASING TREND IN THE PROFIT, WE REDUCE THE DISALLOWANCE FURTHER TO 50% AGAINST RS. 38,84,778/- SUSTAINED BY THE LEARNED CIT(A). 10. AGAINST THE ABOVE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08, THE MATTE R WAS CARRIED TO THE HON'BLE HIGH COURT BUT REMAINED EMPT Y HANDED AS THE APPEAL OF THE ASSESSEE I.E. ITA NO. 79/IND/2 013 WAS DISMISSED BY THE HON'BLE HIGH COURT VIDE ORDER DATE D 17.12.2015 AND THE ORDER OF THE TRIBUNAL DATED 11.2 .2013 WAS UPHELD. THERE ARE VARIOUS RIVAL CONTENTIONS OF BOTH THE SIDES WHICH HAVE BEEN PLACED BEFORE US DURING THE COURSE OF SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 11 ARGUMENTS. HOWEVER, NEITHER THE ASSESSEE NOR THE RE VENUE COULD SHOW US ANY FACTUM ESTABLISHING THAT THE FACTS AND CIRCUMSTANCES OF ASSESSMENT YEAR 2007-08 ARE DISTIN CT FROM THE ASSESSMENT YEAR 2011-12. RATHER THEY AGREED TO THIS PROPOSITION THAT THE FACTS RELATING TO THIS ISSUE ARE CONSTANTL Y IDENTICAL AND SIMILAR RIGHTY FROM THE ASSESSMENT YEAR 2007-08 TO THE PRESENT ASSESSMENT YEAR 2011-12, THEREFORE, IN OUR CONSIDER ED OPINION WE HAVE NO ALTERNATE BUT TO RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL AND OF THE HON'BLE M.P. HIGH COURT FOR THE ASSESSMENT YEAR 2007-08. 11. IN THE ASSESSMENT YEAR 2007-08 AS NOTED BY THE TRIBUNAL IN PARA 3, THE TOTAL PAYMENT OF CASUAL WORKERS WAS RS. 50,84,778/- AND AFTER ALLOWING RS. 12 LACS FOR SOME CASUAL STAFF TO BE PAYABLE FOR NON-HAZARRDOUS FUNCTIONS LIKE LOA DING, UNLOADING, BALANCE AMOUNT OF RS.38,84,778/- WAS DIS ALLOWED BY THE AUTHORITIES BELOW. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL REDUCED THE DISALLOWANCE FURTHER TO 50% AS AGAINST RS. 38,84,77 8/- AS SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEAL S). IN THE PRESENT CASE, UNDISPUTEDLY THE PAYMENT OF CASUAL LA BOUR IN CASH SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 12 IN THE ASSESSMENT YEAR 2011-12 AS PER THE TABLE SUB MITTED BY THE ASSESSEE AT PAGE 2 OF SYNOPSIS, WAS RS.83,96,57 4/-. BE THAT AS IT MAY, WE DIRECT THE ASSESSING OFFICER TO MAKE THE DISALLOWANCE AS PER THE ORDER OF THE TRIBUNAL FOR T HE ASSESSMENT YEAR 2007-08 IN THE FOLLOWING MANNER :- (I) THE ASSESSING OFFICER SHALL FIRST REDUCE THE AM OUNT TOWARDS CASUAL STAFF DEPLOYED FOR NON-HAZARDOUS FUNCTIONS L IKE LOADING, UNLOADING, IN THE SAME PROPORTION AS WAS A LLOWED FOR THE ASSESSMENT YEAR 2007-08 I.E. RS. 12 LACS OU T OF RS.50,84,778/- WHICH COMES TO 23.60% OF TOTAL PAYME NTS ON CASUAL LABOUR. (II) THEREAFTER, 50% WOULD BE FURTHER DISALLOWED OU T OF THE REMAINING AMOUNT CALCULATED AS PER THE DIRECTIONS G IVEN IN (I) ABOVE. 12. WITH THE ABOVE DIRECTIONS, THIS COMMON GROUND I N THE ASSESSEES AND REVENUES APPEAL IS DISPOSED OFF. 13. THE NEXT COMMON ISSUE INVOLVED IN THESE CROSS-A PPEALS IS REGARDING THE EXPENSES CLAIMED UNDER THE HEAD FOREIGN TRAVEL EXPENSES. 14. THE FACTS, IN NUTSHELL, ARE THAT THE ASSESSEE C LAIMED AN AMOUNT OF RS.13,02,800/- UNDER THE HEAD FOREIGN TRAVELLING EXPENSES . ON EXAMINATION OF THE CLAIM OF THE ASSESSEE IN T HE SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 13 LIGHT OF THE DOCUMENTS AND THE SUBMISSIONS OF THE A SSESSEE, THE ASSESSING OFFICER OBSERVED AS UNDER :- ON GOING THROUGH THE DETAILS OF FOREIGN TRAVELS, I T IS OBSERVED THAT THESE TRIPS BY THE DIRECTOR WERE FOR PERSONAL PURPOSES ONLY. IT IS OBSERVED THAT THE LETTERS ISSU ED BY THE FOREIGN COMPANIES PERTAIN TO THE YEAR 1996 AND 1999 . THE PHOTOGRAPHS SUBMITTED BY THE ASSESSEE COMPANY ALSO PERTAIN TO 1996 AND 1999 ONLY. FURTHER, THE DETAILS OF STAY OF THE DIRECTORS AND INLAND TRAVELLING ARE NOT GIVEN T O EXPLAIN THE UTILISATION OF DOLLARS PURCHASED BY THE COMPANY . IN VIEW OF THE ABOVE THE AMOUNT OF RS. 13,02,800/- CLAIMED UNDER THE HEAD FOREIGN TRAVELLING EXPENSES IS ADDED TO TH E TOTAL INCOME OF THE ASSESSEE. 15. HAVING BEEN DIS-SATISFIED WITH THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 16. THE COMMISSIONER OF INCOME TAX (APPEALS), AFTER CONSIDERING THE FACTS OF THE ISSUE INVOLVED AND THE ARGUMENTS OF THE ASSESSEE, OBSERVED AS UNDER :- SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 14 6.4 I HAVE CONSIDERED THE FACTS OF THE CASE A ND THE WRITTEN SUBMISSIONS AND ARGUMENTS OF THE APPELLANT. THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD ON THE BASIS OF WHICH HE HAS SUMMARILY RECORDED THE FINDING THAT TH E TRIPS OF THE DIRECTORS WERE FOR PERSONAL PURPOSES. THE AP PELLANT HAS PRODUCED SUFFICIENT EVIDENCE BEFORE THE A.O. TO ESTABLISH ITS CLAIM FOR EXPENDITURE ON FOREIGN TRAVEL. THE BU SINESS PURPOSE IS ESTABLISHED FROM THE LETTER FROM ICC AND THE VISITS FROM THE COPIES OF THE AIR TICKETS, THE STAMPED PAS SPORTS AND THE BILLS OF PURCHASE OF FOREIGN EXCHANGE FILED BY THE APPELLANT. HOWEVER, AS HELD BY THE A.O., THE ASSE SSEE COULD NOT FURNISH DETAILS OF THE INLAND TRAVELLING AND THE PLACES VISITED IN THE FOREIGN COUNTRIES. SINCE PERS ONAL ELEMENT IN THE EXPENDITURE INCURRED CANNOT BE RULED OUT, DISALLOWANCE OF RS.5,00,000 IS UPHELD. ADDITION OF RS.8,02,800 (RS.13,02,800 (-) RS.5,00,000) IS DELET ED. 17. FELT AGGRIEVED WITH THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL AGAI NST THE RELIEF GRANTED WHEREAS THE ASSESSEE IS IN APPEAL AGAINST T HE ADDITION MAINTAINED BY THE COMMISSIONER OF INCOME TAX (APPEA LS). SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 15 18. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED ALL THE RELEVANT DE TAILS IN SUPPORT OF ITS CLAIM OF FOREIGN TRAVELLING EXPENSES SUCH AS LETTER FROM ICC, AIR TICKETS, PASSPORTS AND THE BILLS OF P URCHASE OF FOREIGN EXCHANGE, ETC. AND AS SUCH THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN MAINTAINING THE PART ADDITION. ON SPECIFIC QUERY BY THE BENCH REGARDING NON-SUBMIS SION OF DETAILS OF IN-LAND TRAVELLING AND THE PLACES VISITE D IN THE FOREIGN COUNTRIES BEFORE THE ASSESSING OFFICER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WITHOUT THE INLAND TRAV EL, IT IS NOT FEASIBLE TO TRAVEL TO FOREIGN COUNTRIES. 19. ON THE OTHER HAND, THE LEARNED DR WHILE SUPPORT ING THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) S UBMITTED THAT SINCE THE ASSESSEE HAS NOT FILED ALL THE DOCUM ENTS RELATING TO FOREIGN TRAVEL, THE COMMISSIONER OF INCOME TAX ( APPEALS) WAS NOT JUSTIFIED IN GIVING PART RELIEF TO THE ASSESSEE . THE LEARNED DR FURTHER SUBMITTED THAT IN SUCH TRIPS, PERSONAL ELEM ENT IN EXPENDITURE INCURRED CANNOT BE RULED OUT. THE LEARN ED DR, THEREFORE, PRAYED THAT THE ORDER OF THE COMMISSIONE R OF INCOME SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 16 TAX (APPEALS) DESERVES TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAINTAINED. 20. ON CONSIDERATION OF THE RIVAL SUBMISSIONS IN VIEW OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSE SSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD IN SUPPORT O F HIS ALLEGATION THAT THE TRIPS OF THE DIRECTORS WERE FOR PERSONAL PURPOSES. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOTED THAT THE ASSESSEE HAS PRODUCED SUFFICIENT EVIDENCE BEFORE THE ASSESSING OFFICER TO ESTABLISH ITS CLAIM OF EXPENDI TURE ON FOREIGN TRAVEL AND BUSINESS PURPOSE IS ALSO ESTABLISHED FRO M THE LETTER OF ICC AND THE VISITS FROM THE COPIES OF AIR TICKETS, STAMPED PASSPORT AND THE BILLS OF PURCHASE OF FOREIGN EXCHA NGE FILED BY THE ASSESSEE. IT IS THE MAIN CONTENTION OF THE REV ENUE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GRANTED PA RT RELIEF TO THE ASSESSEE WITHOUT APPRECIATING THE FACTS AND ALL EGATIONS MADE BY THE ASSESSING OFFICER. PER CONTRA, IT IS THE ALL EGATION OF THE ASSESSEE IN ITS CROSS APPEAL THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN PARTLY CONFIRMING THE ADDITI ON OF RS.5 LACS WITHOUT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE AND WITHOUT CONSIDERING THE FACT THAT THE EXPENSES INCU RRED FOR SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 17 FOREIGN TRAVEL ARE FOR BUSINESS PURPOSES ONLY AND T HERE IS NO PERSONAL ELEMENT IN THIS EXPENDITURE. 21. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIO NS AND FROM THE RELEVANT PART OF THE ASSESSMENT ORDER I.E. PARA 4.2 , WE OBSERVE THAT AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE ASS ESSING OFFICER HELD THAT FROM THE DETAILS OF FOREIGN TRAVEL, IT IS OBSE RVED THAT THESE TRIPS OF DIRECTORS WERE FOR PERSONAL PURPOSES ONLY. THE A SSESSING OFFICER NOTED THAT THE LETTERS ISSUED BY THE FOREIGN COMPAN IES AND PHOTOGRAPHS SUBMITTED BY THE ASSESSEE ARE PERTAININ G TO ASSESSMENT YEARS 1996-97 AND 1998-99 AND THE DETAIL S IN RELATION TO TRAVELLING ARE NOT GIVEN TO EXPLAIN THE UTILISAT ION OF DOLLARS PURCHASED BY THE COMPANY. BEFORE US THE ASSESSEE HA S FILED LEDGER FOR TRAVELLING EXPENSES, BILLS ISSUED BY THE TRAVEL AGENTS, FOREIGN CURRENCY PURCHASE BILLS, COPIES OF PASSPORT OF MR. JAHIR QURESHI AND HIS WIFE FAIZA QURESHI BUT THERE IS NO EXPLANAT ION REGARDING THE FACT THAT THE IMPUGNED EXPENSES INCURRED ON TRA VELLING AND FOREIGN CURRENCY WERE FOR THE PURPOSE OF BUSINESS O F THE ASSESSEE. THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING REG ARDING THE PURPOSE OF TRIPS. THE MAIN CONTENTION OF THE ASSESS EE IS THAT THE LETTERS AND PHOTOGRAPHS SUBMITTED BY THE ASSESSEE A RE RELATING TO SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 18 THE PERIOD 1996 TO 1999. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSEE HAS PRODUCED S UFFICIENT EVIDENCE BEFORE THE ASSESSING OFFICER TO ESTABLISH ITS CLAIM FOR EXPENDITURE ON FOREIGN TRAVELLING AND BUSINESS PURP OSE IS ESTABLISHED FROM THE LETTER OF ICC BUT WE ARE UNABL E TO SEE THAT LETTER IN THE PAPER BOOK. HOWEVER, COPY OF THE SAM E HAS BEEN FILED BY THE ASSESSEE ALONG WITH SYNOPSIS AS ANNEXURE-1 D ATED 20.6.2010. FROM THE COPY OF THE LEDGER ACCOUNT OF T RAVELLING EXPENSES, WE SEE THAT THE ENTRIES FROM DATED 7.4.20 10 TO 26.10.2010 ARE PRIOR TO THIS LETTER. BE THAT AS IT MAY, IN OUR CONSIDERED OPINION, THE ISSUE HAS NOT BEEN PROPERLY EXAMINED BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOM E TAX (APPEALS) HAS PARTLY ALLOWED THE CLAIM WITHOUT ANY JUSTIFIED REASONING AND BASIS AND BY WAY OF INCORRECT APPRECI ATION OF THE MATERIAL AND DOCUMENTS PLACED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). IN THESE CIRCUMSTANCES, WE HAVE NO ALTERNATE BUT TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N WITH THE DIRECTION THAT HE SHALL ALLOW THE ASSESSEE TO FILE THE ENTIRE EVIDENCE PERTAINING TO ITS CLAIM REGARDING THE FOREIGN TRAVEL EXPENSES INCURRED ON ITS SS CROP CARE LTD. ITA NO.243/IND/2016 & ITA NO. 197/IND/2016 19 DIRECTORS DURING THE PERIOD UNDER CONSIDERATION, AF TER AFFORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND WITHOUT BEING PREJUDICED FROM THE EARLIER ASSESSMENT AND THE FIRST APPELLATE ORDER. ACCORDINGLY, COMMON GROUND NO. 2 OF THE ASSESSEE AN D THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER A S INDICATED ABOVE. 22. IN THE RESULT, THE APPEALS OF THE ASSESSEE AND THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 23 THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 3 RD MAY, 2017. SD/- SD/- &+ # # (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER J UDICIAL MEMBER MAY 3 RD , 2017 . DN/