DY. C.I.T.1(2), RAIPUR (CG) V. M/S GODAWARI POWER & ISPAT LTD., RAIPUR (CG)

ITA 363/BIL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8963 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 14-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MIKSHRA
• Assessee Lawyers: R B DOSHI
• Keywords: Depreciation; Business expenditure; Earning of tax free income; Capital receipt; Revenue expenditure
• Section: 40A(3); 14A; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NOS.363 & 364/RPR/20 14 ASSESSMENT YEARS : 2009-2010 & 2010-2011 DCIT 1(2), AAYAKAR BHAVAN, RAIPUR VS. GODAWARI POWER & ISPAT LIMITED, PLOT NO.482/2, INDUSTRIAL GROWTH CENTRAL PHASE-1, RAIPUR PAN/GIR NO.AAACI 7189 K (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI R.B.DOSHI, AR REVENUE BY : SHRI P.K.MIKSHRA, CIT DR DATE OF HEARING : 17/01/ 2018 DATE OF PRONOUNCEMENT : /01/ 2018 O R D E R PER PAVAN KUMAR GADALE, JM BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED A GAINST THE SEPARATE ORDERS OF THE CIT(A)-RAIPUR, BOTH DATED 25.9 .2014 FOR THE ASSESSMENT YEARS 2009-2010 & 2010-2011, RESPECTIVELY. FIRST, WE TAKE UP THE APPEAL IN ITA NO.363/RPR/2014 : A.Y. 2009- 2010. 2. GROUND NO.1 OF APPEAL READS AS UNDER: WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, TH E CIT(A) HAS ERRED IN ALLOWING ADDING OF THE PROFIT ON SALE OF FLY 2 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 ASH BRICKS AMOUNTING TO RS.4,05,493/- FOR THE PURPOSE O F CALCULATION OF DEDUCTION UNDER SECTION 80IA OF THE I.T. ACT, 1961. 3. FACTS IN BRIEF ARE THAT THE ASSESSING OFFICER OBSERVED T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF STEEL MANUFACTURING-SPONGE I RON & FERRO ALLOYS AND GENERATION OF POWER. THE FLY ASH IS A BY-PRODUCT G ENERATED OUT OF THE SAID GENERATION ACTIVITY OF ELECTRICITY. DURING THE ASSE SSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS INCLUDED SALE OF FLY-A SH BRICKS OF RS.31,85,628/- IN THE TOTAL SALE OF POWER DIVISION AN D HAS CLAIMED DEDUCTION U/S. 80IA ON THE ENTIRE PROFIT. THE ASSESSING OFFICER EX AMINED THE SALES ACCOUNT OF POWER DIVISION AND FOUND THAT THE SALE PROCE EDS ON SALE OF THE SAID BRICKS WAS FOUND CREDITED AND THE RELEVANT PROFITS EARNED ON SALE OF THE FLY ASH BRICKS ARE CONSIDERED BY THE ASSESSEE AS ELIGIBLE PR OFITS FOR THE PURPOSE OF CLAIMING OF DEDUCTION UNDER SECTION 80-IA OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED THE DED UCTION IN THE YEAR RS.4,05,493/- AND THEREFORE, HE REDUCED THIS AMO UNT FROM THE TOTAL CLAIM OF THE ASSESSEE. 4. BEING AGGRIEVED THE VIEW SO TAKEN BY THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). 5. BEFORE THE LD CIT(A), IT WAS ARGUED BY THE ASSESSEE T HAT THE FLY ASH BRICK PLANT IS AN INTEGRAL PART OF THE POWER PLANT. I T IS A FUNCTIONAL REQUIREMENT OF THE POWER PLANT TO MAKE A SUITABLE AR RANGEMENT FOR DISPOSAL 3 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 OF FLY ASH WITHOUT WHICH THE ASSESSEE COMPANY COULD NOT HAV E RUN THE POWER PLANT. IT WAS SUBMITTED THAT SETTING UP OF FLY-ASH BR ICKS UNIT IS MANDATORY AS PER REQUIREMENT OF THE CG ENVIRONMENT CONSERVATION BOARD. THEREFORE, PROFIT AND LOSS, IF ANY, HAS TO BE CONSIDERED AS ELIGIBL E FOR CALCULATING DEDUCTION U/S. 80IA OF THE ACT. THE ASSESSEE HAS INCURRED L OSS OF RS.4,05,493/-, HENCE THE SAID AMOUNT WAS REDUCED FROM T HE DEDUCTION U/S. 80IA OF THE ACT. 6. THE CIT(A) CONSIDERED THE ABOVE SUBMISSION OF THE ASSE SSEE AND ALLOWED THE CLAIM OF THE ASSESSEE. 7. AGAINST THE ABOVE FINDINGS OF THE LD CIT(A), REV ENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 8. BEFORE US, LD A.R. CONTENDED THAT ON THE ABOVE ISSU E, THE ASSESSEE HAD COME UP FOR CONSIDERATION IN THE ASSESSMENT YEAR 20 07-08 & 2008-09 AND THE ASSESSEE HAS WITHDRAWN THE APPEAL. IN VIEW OF ABOVE, WE REVERSE THE ORDER OF THE CIT(A) AND RESTORE THE ADDITION MAD E BY THE ASSESSING OFFICER. THIS GROUND OF REVENUE IS ALLOWED. 9. IN GROUND NO.2 OF APPEAL, THE GRIEVANCE OF THE RE VENUE IS THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.3,52,5 8,222/- ON ACCOUNT OF LOSS ON FOREIGN EXCHANGE FLUCTUATION. 4 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 10. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBIT ED LOSS ON MARK TO MARKET BASIS IN RESPECT OF UNSETTLED FOREIGN DE RIVATIVE TRANSACTION AS ON 31.3.2009. THE ASSESSEE HAS MADE ONLY PROVISION IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER OBSERVED THAT THE ACTUAL GAI N/LOSS SHALL BE DETERMINED ONLY ON THE SETTLEMENT DATE. THEREFORE, THE PROVISION OF RS.5,87,63,703/- DEBITED IN THE PROFIT AND LOSS ACCOUNT IS TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THE 40% OF RS.5,87,63 ,703/- I.E,. RS.2,35,05,,481/- HAS BEEN REDUCED FROM THE INCOME OF P OWER DIVISION, THE ELIGIBLE PROFITS OF POWER DIVISION SHALL BE INCREASED T O THE EXTENT OF RS.2,35,05,481/-. ACCORDINGLY, THE ASSESSING OFFICER DISAL LOWED THE BALANCE AMOUNT OF RS.3,52,58,222/-. 11. ON APPEAL, THE CIT(A) DELETED THE ADDITION FOLL OWING THE ORDER IN ASSESSMENT YEAR 2008-09 IN APPEAL NO.077/10-11 DATED 15 .7.2011. 12. AFTER HEARING BOTH THE SIDES AND PERUSING THE ORD ERS OF LOWER AUTHORITIES, WE FIND THAT THIS ISSUE HAD COME UP FOR CO NSIDERATION BEFORE THE TRIBUNAL IN THE ASSESSMENT YEAR 2008-09 IN ASSESSEES OWN CASE IN ITA NO.203/BLPR/2011, WHEREIN, THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER ON THE FOLLOWING DIRECTIONS: 22. ON THIS ISSUE WE HAVE HEARD BOTH THE SIDES. WE HAV E BEEN INFORMED THAT THE FORWARD CONTRACT WAS ENTERED INTO BY THE ASSESSEE TO HEDGE THE LOSS IN RESPECT OF SALE OF CARBON CREDIT S. 5 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 SINCE WE HAVE HELD THAT THE RECEIPTS FROM SALE OF CARBON CREDIT WERE IN THE NATURE OF CAPITAL RECEIPT, THEREFORE, THE CONSEQUENCE IS THAT THE IMPUGNED LOSS SHALL ALSO BE A CAPITAL LOSS. TH E PRESENT SITUATION IS THAT THE REVENUE AUTHORITIES HAVE NOT EXAMINED THE NATURE OF LOSS SUFFERED BY THE ASSESSEE AND H OW A PROVISION WAS MADE. WHETHER, IT WAS A FOREIGN DERIVAT IVE TRANSACTION OR TRANSACTION IN RESPECT OF FORWARD EXCHANG E CONTRACT PERTAINING TO HEDGE THE LOSS IN RESPECT OF CARBO N CREDIT HAS NOT BEEN CLEARLY EMERGED FROM THE FACTS OF THE CAS E. WE, THEREFORE, DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE AO SO THAT HE CAN MAKE NECESSARY ENQUIRY AND IF IT WAS A FOREIGN EXCHANGE LOSS CONNECTED TO THE CARBON CREDIT THEN NATURALL Y THE SAME SHOULD NOT BE ALLOWED IN THE LIGHT OF THE VIEW T AKEN BY US ABOUT THE NATURE OF THE CARBON CREDIT RECEIPT. THIS GR OUND OF THE REVENUE IS THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. WE, FIND THERE BEING NO CHANGE IN THE FACTS IN THE PRE SENT YEARS UNDER CONSIDERATION THAN THE FACTS IN THE ASSESSMENT YEAR 2008-09 , WE, RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING O FFICER WITH THE SAME DIRECTION AS ABOVE. HENCE, THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN GROUND NO.3, THE GRIEVANCE OF THE REVENUE IS T HAT THE CIT(A) ERRED IN HOLDING THAT DEPRECIATION OF RS.82,99,525/- I.E. 4 0% DEPRECIATION ON COMMON FIXED ASSETS BE NOT REDUCED FROM ELIGIBLE PROFIT CLAIMED U/S. 80IA OF THE ACT. 6 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. THE APPELLANT HAS MAINTAINED SEPARATE BOOKS OF ACCO UNT FOR THE POWER DIVISION I.E. ELIGIBLE BUSINESS AND OTHER DIVISIONS BEIN G N ON-ELIGIBLE BUSINESS. THE ASSESSING OFFICER HAS STATED THAT THE DEPRECI ATION ON COMMON ASSETS WAS NOT DEDUCTED FROM CLAIM OF DEDUCTION U/S. 8I0I A OF THE ACT. THEREFORE, HE DISALLOWED THE SAME TOWARDS UNALLOCATED D EPRECIATION NOT REDUCED FROM PROFIT ELIGIBLE FOR DEDUCTION U/S. 80IA O F THE ACT. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE ON THE GROUND THA T THE ASSESSING OFFICER HAS NOT ESTABLISHED ANY NEXUS BETWEEN THE SAID FIXED ASS ETS WITH THE POWER DIVISION OF THE ASSESSEE. WE FIND THAT SIMILAR ADDITIO N WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2008-09 AND THE CIT (A) HAS CONFIRMED THE SAME. ON APPEAL BY THE ASSESSEE, THE ASSE SSEE DID NOT PRESS THIS GROUND BEFORE THE TRIBUNAL. THEREFORE, THIS ADD ITION WAS SUSTAINED. SINCE THE FACTS OF THE PRESENT YEAR IS SIMILAR TO THAT IN THE YEAR 2008-09, WE REVERSE THE ORDER OF THE CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. HENCE, THIS GROUND OF REVENUE IS ALLOWED. IN RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. NOW WE TAKE UP ITA NO.364/RPR/2014: A.Y. 2010-2011 . 15. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF AP PEAL: 7 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.2,03,73,385/- U/S. 14A OF THE I.T.ACT. 2. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25,02 ,,011/- OUT OF DISALLOWANCE MADE BY THE AO ON ACCOUNT OF POOJA AND FESTIVAL EXPENSES THEREBY GIVING RELIEF OF RS.6,54,900/-. 3. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.21, 94,020/- ON ACCOUNT OF SHARE CAPITAL EXPENSES. 4. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.77, 58,654/- ON ACCOUNT OF SOCIAL WELFARE EXPENSES WHICH HAVE NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSIN ESS. 5. WHETHER IN LAW AND ON FACTS &Y CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S.40A(3 ) OF THE I.T.ACT, 1961 TO RS.17,54,455/- THEREBY GIVING A RELI EF OF RS.7,02,476/-. 16, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS INV ESTED RS.71,54,15,800/- IN SHARES AND DIVIDEND AND INCOME FRO M THESE INVESTMENT IS EXEMPT FROM TAX. THEREFORE, THE ASSESSING OFFICER DI D NOT ALLOW FULLY THE INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE AT RS.32,03,9 1,939/- ON BORROWED FUNDS AND DISALLOWED A SUM OF RS.2,03,73,385/- . 17. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER BY DISCUSSING THE ISSUE AT LENGTH AND ALSO BY REL YING THE JUDICIAL DECISIONS AT PAGES 2 TO 12 OF THE ORDER. HENCE, THE REV ENUE IS IN APPEAL BEFORE US. 8 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 18. AT THE TIME OF HEARING, BOTH THE SIDES CONCEDED TH AT GROUND NO.1 IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. ALOK FERRO ALLOYS LTD., VS DCIT IN ITA NO.233/RLPR/2011 FOR THE ASSESSMENT YEAR 2008-09, WHEREIN, ON SIMILAR FACTS, IT WAS HELD AS UNDER: UPON HEARING BOTH THE LD COUNSELS, WE FIND THAT THE A SSESSEES COUNSEL IS MAKING A PLEA THAT INVESTMENTS MADE BY THE ASSE SSEE COMPANY IN THE PRESENT CASE WERE STRATEGIC INVESTMENTS. TH EY WERE NOT MADE TO EARN EXEMPT INCOME, BUT THEY WERE MADE WITH THE INTENTION TO HOLD CONSOLIDATED HOLDINGS IN T HE GROUP COMPANIES. WE FIND THAT THIS PLANK OF ARGUMENT OF TH E LD COUNSEL OF THE ASSESSEE WAS NOT BEFORE THE AUTHORITIES BE LOW. THE LD COUNSEL OF THE ASSESSEE IS CONFINING HIS ARGUMENT TO HIS SUBMISSION THAT THE INVESTMENTS WERE MADE IN THE GROUP COMPANIES FOR STRATEGIC PURPOSES AND TO CONSOLIDATE HOLDING S AND NOT TO EARN DIVIDEND EXEMPT INCOME.. WE FIND THAT T HESE SUBMISSIONS WERE NOT BEFORE THE AUTHORITIES BELOW. THIS FACTS ALSO NEEDS FACTUAL VERIFICATION AND HENCE, WE REMIT THE ISSUE TO THE FILE OF THE AO. THE AO SHALL EXAMINE THE PATTER N OF HOLDINGS IN THE GROUP COMPANIES AND DECIDE AS PER THE ASSESSEES SUBMISSION BEFORE US AND IN THE LIGHT OF THE CASE LAWS SUB MITTED ABOVE AND AS PER LAW. 19. IN VIEW OF ABOVE, WE SET ASIDE THE ORDER OF THE C IT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER, WHO SHA LL EXAMINE THE PATTERN OF HOLDINGS IN THE GROUP COMPANIES AND DECIDE T HE ISSUE AS PER THE DIRECTION GIVEN IN THE CASE OF M/S. ALOK FERRO ALLOYS LTD.,(SUPRA). THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE S. 9 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 20. APROPOS GROUND NO.2 OF APPEAL, THE FACTS ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER THE HE AD POOJA & FESTIVAL EXPENSES OF RS.15,17,117/- AND RS.16,38,894/- UNDER THE HEAD CHARITY & DONATION EXPENSES. THE ASSESSING OFFICER OBSERVE D THAT THESE EXPENSES ARE NOT RELATABLE TO BUSINESS PURPOSES OF THE ASSE SSEE AND, THEREFORE, DISALLOWED THE SAME FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HIRA FERRO ALL OYS VS JCIT, 326 ITR 261 (CHHATT) 21. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE E XPENSES INCURRED TOWARDS CHARITY AND DONATION WERE IN THE NATURE OF EX PENSES TOWARDS CORPORATE SOCIAL RESPONSIBILITY AND POOJA EXPENSES WERE INCURRED FOR INDEPENDENCE DAY, REPUBLIC DAY, VISWAKARMA POOJA CELE BRATION AND ARE ALLOWABLE AS BUSINESS EXPENDITURE. THE ASSESSEE ALSO CITED CBDT CIRCULAR NO.17(F.NO.26(2)-II-IT/43 DATED 6.5.1983 & CIRCULAR NO.13A/20/68-IT(A-II) DATED 3.10.1968 WHEREIN, IT WAS EMPHASIZED THAT EXPEN SES INCURRED ON THE OCCASION OF DIWALI AND MAHURAT ARE IN THE NATURE OF BU SINESS EXPENDITURE AND IT WAS NOT LAY DOWN ANY MONETARY LIMITS FOR THE PURPOSE OF ALLOWANCE OF THE EXPENDITURES. 10 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 22. CONSIDERING THE SUBMISSION OF THE ASSESSEE AND ALSO TH E CBDT CIRCULARS ON THE ISSUE, THE CIT(A) ALLOWED RELIEF OF RS. 6,54,900/- AND SUSTAINED THE BALANCE ADDITION. 23. HAVING HEARD THE RIVAL SUBMISSIONS, WE FIND THAT T HE CIT(A) AFTER CONSIDERING THE CBDT CIRCULARS HELD THAT THE EXPENSES UND ER THE HEAD CHARITY, DONATION DO NOT RELATES TO BUSINESS OF THE ASSESSE E WHEREAS HE HAS ALLOWED DEDUCTION FOR THE POOJA AND FESTIVALS AGGREGAT ING TO RS.6,54,900/-. WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE C IT(A), WHICH IS HEREBY CONFIRMED. GROUND NO.2 OF THE APPEAL IS DISMISSED. 24. ADVERTING TO NEXT ISSUE I.E. DISALLOWANCE OF SHARE CAPITAL EXPENSES OF RS.21,94,020/-, THE ASSESSING OFFICER OBSERVED THAT THE ASSE SSEE DID NOT RAISE ANY FRESH CAPITAL DURING THE YEAR, WHICH IS VERIFI ABLE FROM SCHEDULE I OF BALANCE SHEET. THE ASSESSEE SUBMITTED THAT THE ASSESSE E IS A COMPANY LISTED WITH BSE, NSE AND SEBI AND THESE EXPENSES RELAT E TO ANNUAL CUSTODIAN FEES, LISTING FEES, COMPLIANCE CERTIFICATE FEES, P RINTING OF ANNUAL REPORTS, CHARGES PUBLICATION OF QUARTERLY, HALF-YEARLY AND ANNUAL RESULTS AS PER THE REQUIREMENTS OF SEBI AND OTHER MISC PROFESSIONAL FEES RELATING TO THE WORK. THE ASSESSING OFFICER REJECTED THE SUBMISSION OF THE ASSESSEE AND DISALLOWED RS.21,94,020/-. 11 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 25. BEFORE THE CIT(A), THE ASSESSEE REITERATED THE SUBMI SSIONS BEFORE THE ASSESSING OFFICER AND SUBMITTED THAT AS PER BOARD CIRCULAR NO.10/67/65- IT(A-1) DATED 26.8.1965, SUCH EXPENDITURE IS ALLOWABL E AS REVENUE EXPENDITURE. 26. THE CIT(A) DELETED THE ADDITION BY OBSERVING TH AT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE WITHOUT CONSIDERIN G RELEVANT SCHEDULE OF THE BALANCE SHEET. THE NATURE OF EXPENSES AS CLAIMED SHOWS THAT EXPENSES ARE OF RECURRING NATURE INCURRED IN CONNE CTION WITH VARIOUS COMPLIANCES AS PER LISTING AGREEMENTS, ETC. HE ALSO CITED T HE BOARD CIRCULAR(SUPRA) AND DELETED THE ADDITION. 27. BEFORE US, LD D.R. SUPPORTED THE ORDER OF THE ASSESSI NG OFFICER WHEREAS LD AR SUPPORTED THE ORDER OF THE CIT(A). 28. WE FIND THAT THE ASSESSEE IS LISTED WITH BSE, NSE A ND SEBI, AND THE EXPENSES RELATE TO ANNUAL CUSTODIAN FEES, LISTING FEE S, COMPLIANCE CERTIFICATE FEES, PRINTING OF ANNUAL REPORTS, CHARGES PUBLICATION OF QUARTERLY, HALF-YEARLY AND ANNUAL RESULTS AS PER THE REQUIREMENTS OF SEBI AND OTHER MISC PROFESSIONAL FEES RELATING TO THE WORK, WHICH ARE RECUR RING IN NATURE. THE CIT(A) HAS DELETED THE ADDITION AFTER PROPERLY APPRE CIATING THE FACTS OF THE CASE. HENCE, WE CONFIRM HIS ORDER AND REJECT THE GROUND OF APPEAL OF THE REVENUE. 12 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 29. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE OF RS.77,58,654/- ON ACCOUNT OF SOCIAL WELFARE EXPENSES WHICH HAVE NOT BEEN IN CURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 30. THE ASSESSING OFFICER HAS CLAIMED DEDUCTION FOR AN AMOU NT OF RS.77,58,654/- ON ACCOUNT OF SOCIAL WELFARE EXPENSES FOR DEVELOPMENT OF VARIOUS FACILITIES FOR PUBLIC OF NEARBY VILLAGES LIKE CO NSTRUCTION OF PONDS, ORGANIZING OF MEDICAL CAMPS, PROMOTION OF EDUCATION F ACILITIES, CONTRIBUTION TO GRAM VIKAS SAMITEES FOR VARIOUS DEVELOPMENT WORKS TO EARN GOODWILL IN THE SOCIETY. THE ASSESSING OFFICER REJECTED THE EXPLANAT ION OF THE ASSESSEE AND DISALLOWED THE CLAIM OF THE ASSESSEE. 31. ON APPEAL, THE CIT(A) OBSERVED THAT THERE IS NO D ISPUTE TO THE GENUINENESS OF CLAIM OF EXPENDITURE I.E. INCURRENCE OF EXPENDITURE AND PAYMENT THEREOF. THE CIT(A) FOLLOWING THE DECISION IN THE CASE OF CIT VS. MODI INDUSTRIES LTD., 327 ITR 570, THE DECISION OF KAR NATAKA HIGH COURT IN THE CASE OF CIT VS. INFOSYS TECHNOLOGIES LTD., 360 ITR 71 4 (KAR) AND ALSO THE AMENDMENT IN SECTION 37 IN THE FINANCE NO.(2) ACT, 20 14 W.E.F. 1.4.2015, DELETED THE DISALLOWANCE OF RS.2,68,796/-. 46. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 13 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 47. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E RECORD OF THE CASE. WE FIND THAT THE CIT(A) HAS RELIED ON THE DECISION IN THE CASE OF MODI INDUSTRIES (SUPRA) AND HONBLE KARNATAKA HIGH COURT I N THE CASE OF CIT VS. INFOSYS TECHNOLOGIES LTD (SUPRA), WHEREIN, IT HAS BEEN HE LD THAT THE EXPENDITURE INCURRED ON SOCIAL RESPONSIBILITY WAS LAID O UT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR PURPOSES OF BUSINESS. THE CIT(A) HAS REFERRED TO THE AMENDMENT MADE IN FINANCE ACT (NO.2) 2014 W.E.F. 1. 4.2015 IN SECTION 37, WHEREIN, IT IS DECLARED THAT FOR THE PURPOSES OF SUB-SECT ION(1) ANY EXPENDITURE INCURRED BY AN ASSESSEE ON THE ACTIVITIES REL ATING TO CORPORATE SOCIAL RESPONSIBILITY REFERRED TO IN SECTION 135 OF THE COMPANIES ACT, 2013 SHALL NOT BE DEEMED TO BE AN EXPENDITURE INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. THE CIT(A) HAS H ELD THAT THERE WAS NO SUCH EMBARGO FOR THE PRECEDING YEARS. IN VIEW OF AB OVE, THE CIT(A) HELD THAT THE DISALLOWANCE CANNOT BE SUSTAINED. IN THE INSTAN T CASE, IT IS SUBMITTED THAT CSR EXPENSES ARE INCURRED FOR THE WELFAR E OF LOCAL COMMUNITY AND THEREBY IMPROVE CORPORATE IMAGE OF THE COMPANIES I NCURRING SUCH EXPENDITURE. WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY CONSIDERED THE DECISION AND DELETED THE ADDITION MADE B Y THE ASSESSING OFFICER AND GROUND NO.D OF APPEAL OF THE REVENUE IS D ISMISSED. 14 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 48. THE LAST ISSUE PERTAINS TO RESTRICTION OF DISALLOWANCE U/S.40A(3) OF THE ACT TO RS.17,54,455/- THEREBY GIVING RELIEF OF RS.7,02 ,475/- TO THE ASSESSEE. 49. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE PAYMENTS IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AS PER THE LIST ENCLOSED IN THE ASSESSMENT ORDER AND, THEREFORE, DISALLOWED RS.17, 54,455/-. 50. ON APPEAL, THE CIT(A) THE ASSESSEE SUBMITTED THAT AS PER LIST FURNISHED, THE EXPENSES TO THE TUNE OF RS.7,02,476/- WE RE BELOW AS PRESCRIBED LIMIT U/S.40A(3) OF THE ACT. IT WAS SUBMITTE D THAT OUT OF TOTAL EXPENSES OF RS.75,10,62,825/-, AS TRANSPORT EXPENSES, ONLY RS.24,56,931/- WAS PAID IN CASH THAT TOO DUE TO URGENT REQUIREMENT OF TRANSPORTERS AND THE PAYMENTS WERE GENUINE. 51. THE CIT(A) FOUND THAT ONLY RS.7,02,476/- PAID IN CASH WERE BELOW THE PRESCRIBED LIMIT AND DELETED THE ADDITION TO THAT EXT ENT AND SUSTAINED THE ADDITION FOR THE BALANCE AMOUNT. 52. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CAREFUL LY GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE FIND THAT THE CI TA) HAS ALLOWED THE DEDUCTION WHICH ARE BELOW THE PRESCRIBED LIMIT U/S.40A (3) OF THE ACT. BEFORE US, NO PLAUSIBLE EXPLANATION WAS SUBMITTED BY THE LD D. R. TO CONTROVERT THE 15 ITA NOS.363 & 364/RPR/2014 ASSESSMENT YEARS : 20098-2010 & 2010-2011 ABOVE FINDINGS OF THE CIT(A). HENCE, WE UPHOLD THE O RDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 53. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON 18 /01/2018. SD/- SD/- (N.S SAINI) ( PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIALMEMBER RAIPUR; DATED 18 /01/2018 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, RAIPUR 1. THE APPELLANT : DCIT 1(2), AAYAKAR BHAVAN, RAIPUR 2. THE RESPONDENT. GODAWARI POWER & ISPAT LIMITED, PLOT NO.482/2, INDUSTRIAL GROWTH CENTRAL PHASE-1, RAIPUR 3. THE CIT(A)- RAIPUR 4. PR.CIT- RAIPUR 5. DR, ITAT, RAIPUR 6. GUARD FILE. //TRUE COPY//