The General Manager, Lakhimpur-Kheri V. Dy. Commissioner of Income Tax, Sitapur

ITA 379/LKW/2013

• Counselvise Citation: 37923714 RSA 2013
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 27-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revenue expenditure
• Section: 43B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.379, 380 & 381/LKW/2013 ASSESSMENT YEARS:2006 - 07 TO 2008 - 09 SARJOO SAHKARI CHINI MILLS LTD., BELRAYAN, DISTT. LAKHIMPUR KHERI. PAN:AAAAS4398E VS. DY.C.I.T., SITAPUR. (APPELLANT) (RESPONDENT) O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF CIT(A) ON COMMON GROUNDS THAT CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE ON ACCOUNT OF SCHOOL FUND EXCEPT THE DIFFE RENCE IN QUANTUM. 2. IN APPEAL NO.379?LKW/2013, ONE MORE GROUND IS RAISED WITH REGARD TO THE DISALLOWANCE OF RS.10,000/ - MADE ON ACCOUNT OF PENALTY OF EXCISE DUTY. SINCE THESE APPEALS WERE HEARD TOGETHER, THE SAME ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 3. I N I.T.A. NO.379/LKW/2013, THE DISALLOWANCE OF RS.10,000/ - WAS MADE ON ACCOUNT OF PENALTY PAID ON EXCISE DUTY BY THE ASSESSING OFFICER APPELLANT BY SHRI S. K. ARORA, F.C.A. RESPONDENT BY SHRI P. K. DEY, D.R. DATE OF HEARING 05/03/2014 DATE OF PRONOUNCEMENT 1 1 / 0 4 / 2 0 1 4 2 ON THE GROUND THAT THE PENALTY WAS PAID FOR INFRACTION OF LAW AND BEFORE THE CIT(A), THE ASSESSEE COULD NOT PLACE ANYTHING ON RECORD TO ESTABLISH THAT THE PENALTY WAS OF COMPENSATORY IN NATURE AND SAME BE ALLOWED. SIMILAR IS THE POSITION BEFORE US. NOTHING IS PLACED ON RECORD TO ESTABLISH THAT THE PAYMENT OF PENALTY WAS OF COMPENSATORY IN NATURE AND NOT FOR INFRACTION OF LA W. SINCE IT HAS BEEN PAID AS PENALTY TO THE EXCISE DEPARTMENT, THE SAME CANNOT BE ALLOWED AS REVENUE EXPENDITURE AS IT WAS MADE FOR INFRACTION OF LAW. ACCORDINGLY, THIS GROUND IS DISMISSED. 4. SO FAR AS THE COMMON GROUND IS CONCERNED, THE FACTS, BORNE O UT FROM THE RECORD, ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED FROM THE DETAILS OF THE SCHOOL FUNDS THAT DEDUCTION IS MADE FROM THE CANE PRICE PAID /PAYABLE TO GROWERS FOR CONSTRUCTION OF DEGREE COLLEGE IN THE AR EA ON THE LAND OF GRAM SAMAJ BUT IT WAS NOT PAID TO THE CONCERNED AGENCY/SCHOOL SAMITI FOR CONSTRUCTING THE DEGREE COLLEGE IN THAT AREA HAVING NOTED THAT THE DEDUCTION MADE UNDER THIS HEAD IS NOT COVERED AS PER THE PROVISIONS OF 43 B OF THE INCOME TAX ACT ( HEREINAFTER REFERRED TO AS THE ACT), THE ASSESSING OFFICER OBSERVED THAT THE SAME CANNOT BE ALLOWED TO BE DEDUCTED. THEREFORE, TILL THE LIABILITY IS NOT PAID, IT IS INCOME IN THE HANDS OF THE ASSESSEE. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT SUB STANTIAL AMOUNT WAS DEDUCTED ON ACCOUNT OF SCHOOL FUND FROM THE CANE PRICE PAYABLE TO GROWERS. HE ACCORDINGLY DISALLOWED THE CLAIM AND MADE THE ADDITION THEREOF. BEFORE THE CIT(A), NO EVIDENCE WAS PLACED WITH REGARD TO THE PAYMENT OF SCHOOL FUND AND IT W AS ADMITTED THAT IT WAS KEPT IN SEPARATE ACCOUNT AND WOULD BE PAID AS AND WHEN THE SCHOOL SAMITI DEMANDS FOR CONSTRUCTION AND RUNNING OF DEGREE COLLEGE. BEING NOT CONVINCED WITH THE EXPLANATION OF 3 THE ASSESSEE, THE CIT(A) CONFIRMED THE ADDITION AND NOW TH E ASSESSEE IS BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED ITS CONTENTIONS AS RAISED BEFORE THE CIT(A). IT WAS ALSO CONTENDED THAT CERTAIN AMOUNT WAS PAID AND THE REMAINING AMOUNT IS ASCERTAINED LIABILITY AND NOT THE SELF - GENERATED LIA BILITY, WHICH SHALL BE PAID TO THE SCHOOL BY THEM AS AND WHEN DEMANDED . DEDUCTION FROM THE CANE PRICE WAS MADE AS PER THE DECISION OF THE BOARD OF DIRECTORS OF THE SOCIETY FOR THE BENEFIT OF THE CHILDREN OF THE ASSESSEE AS WELL AS THE CANE GROWERS OF THE SOCIETY WHO SUPPLY CANE TO THE MILL . T HEREFORE, THIS AMOUNT IS KEPT FOR STAFF WELFARE ACTIVITY OF THE ASSESSEE. 6. THE LEARNED D.R., ON THE OTHER HAND, HAS SAID THAT SINCE THE ASSESSEE HAS COLLECTED THE SCHOOL FUND FROM THE CANE PRICE PAYABLE TO GROWERS AND IT WAS NOT GIVEN TO THE SCHOOL SAMITI FOR CONSTRUCTION OF SCHOOL, THE SAME AMOUNT IS AN INCOME OF THE ASSESSEE AND IS CHARGEABLE TO TAX. T HE DEDUCTION MAY BE ALLOWED IN THE YEAR IN WHICH SCHOOL FUND IS GIVEN TO THE SCHOOL SAMITI FOR THE CONSTRUCTION A ND RUNNING OF THE SCHOOL. 7. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND FORCE IN THE CONTENTION OF THE REVENUE THAT NEITHER THE DEDUCTION WAS MADE PURSUANT TO ANY LEGAL PROVISION NOR U/S 43B OF THE ACT. THEREFORE, WHATEVER AMOUNT WAS COLLECTED BY THE ASSESSEE ON ACCOUNT OF SCHOOL FUND FROM THE PAYMENT TO CANE GROWERS, THE SAME IS INCOME OF THE ASSESSEE AND DEDUCTION MAY BE ALLOWED IN THE YEAR IN WHICH IT IS PAID TO THE SCHOOL SAMITI. DU RING THE COURSE OF HEARING, A SPECIFIC QUERY WAS RAISED FROM LEARNED COUNSEL FOR THE ASSESSEE AS TO WHEN THE COLLECTED AMOUNT ON ACCOUNT OF SCHOOL FUND WAS 4 GIVEN TO THE SCHOOL SAMITI FOR CONSTRUCTION AND RUNNING OF SCHOOL. NO SATISFACTORY REPLY WAS OFFERE D FROM THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS REGARD. WE, HOWEVER, ARE OF THE VIEW THAT WHENEVER TH E AMOUNT IS PAID FOR CONSTRUCTION AND RUNNING OF THE SCHOOL OR DEGREE COLLEGE, THE SAME MAY BE ALLOWED IN THAT ASSESSMENT YEAR IN WHICH IT IS PAID. T ILL THEN THE AMOUNT COLLECTED ON ACCOUNT OF SCHOOL FUND FROM THE PRICE PAYABLE TO GROWERS SHALL BE TREATED AS INCOME OF THE ASSESSEE. ACCORDINGLY, WE FIND NO MERIT IN THE ASSESSEES APPEALS AND DISMISS THE SAME AFTER SUBSCRIBING THE VIEW OF CIT(A). 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1 1 / 0 4 / 2 0 1 4 ) SD/. SD/. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 1 / 0 4 / 2 0 1 4 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR