M/s. TATA IRON & STEEL CO. LTD., MUMBAI V. DCIT CIR. - 2 (2), MUMBAI

ITA 4118/MUM/2005

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78874 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 07-11-2013
• Assessment Year: 1996-1997
• Appeal Filed On: 01-06-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Assessee Lawyers: DINESH VYAS; M D THAKUR
• Keywords: Capital asset; Business expenditure; Charitable institution; Principle of natural justice; Rule of consistency; Retrospective amendment; Additional evidence; Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 37; 43B

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - G BENCH. , !' !' !' !' , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & AMIT SHUK LA,JUDICIAL MEMBER /. ITA NO.4118/MUM/2005, # # # # $ $ $ $ / ASSESSMENT YEAR-1996-97 THE TATA IRON & STEEL CO. LTD. BOMBAY HOUSE, 24, HOMI MODY STREET,MUMBAI-400001 VS DCIT CIRCLE 2(2) AAYAKAR BHAVAN, R.NO.545, M.K.ROAD,MUMBAI-400020 PAN: /. ITA NO.4371/MUM/2005, # # # # $ $ $ $ / ASSESSMENT YEAR-1996-97 DCIT CIRCLE 2(2) AAYAKAR BHAVAN, R.NO.545, M.K.ROAD,MUMBAI-400020 VS THE TATA IRON & STEEL CO. LTD. BOMBAY HOUSE, 24, HOMI MODY STREET,MUMBAI- 400001 #% #% #% #% & & & & / ASSESSEE BY : SHRI DINESH VYAS & SHRI M.D. THAKUR ' & / REVENUE BY : SHRI S.D. SRIVASTAVA # # # # ' '' ' ( ( ( ( / DATE OF HEARING : 02-05-2014 )*$ ' ( / DATE OF PRONOUNCEMENT : 13-05-2014 # # # # , 1961 ' '' ' 254 )1( + + + + ! ! ! ! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER BENCH # # # # : CHALLENGING THE ORDERS DATED 28.02.2005 OF THE CIT( A)-II,MUMBAI,ASSESSING OFFICER(AO) AND THE ASSESSEE HAVE FILED CROSS APPEALS FOR THE YEAR UNDE R CONSIDERATION.GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : GROUND OF APPEAL NO.1{PAGE 3-4, PARAS 5- 5.2 OF CIT(A) ORDE R AD HOC DISALLOWANCE OF TRAVELLING EXPENDITURE . RS. 10,00,000 THE LEARNED CIT (A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT TO REDUCE THE DISPROPORTIONATE AMOUN T OF AD HOC DISALLOWANCE ON TRAVELLING EXPENSES INCUR RED ON OUTSIDERS CONSIDERING THE TOTAL DISALLOWABLE EXPENSES INCURRED DURING THE YEAR. GROUND OF APPEAL NO.2{PAGES 4-6, PARAS 6-6.3 OF CIT(A)S ORD ER EXPENDITURE ON MAINTENANCE OF CERTAIN BUILDINGS RS.4,36,49,017 THE LEARNED CIT (A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT THAT CERTAIN BUILDINGS WERE MAINTAIN ED AT FAR FLUNG PLACES DUE TO BUSINESS EXPEDIENCY AND AS HOTELS WERE NOT AVAILABLE IN THESE PLACES, EXPENDITURE ON THE SAME IS ALLOWABLE AS REVENUE EXP ENDITURE. THE LEARNED CIT (A) FURTHER ERRED IN NOT ACCEPTING APPELLANTS CONTENTION THAT EXPENSES SPEC IFICALLY ALLOWABLE ULS,30 TO 36 CANNOT BE DISALLOWE D AS PER PROVISIONS OF SECTION 37(4) AS WELL AS THAT SECTION 37(4) IS LIMITED TO DISALLOW MAINTENANCE EXPENSES AND NOT THE RUNNING EXPENSES. GROUND OF APPEAL NO.3 PAGES 4-6, PARAS 6.6.3 OF CIT (A)S ORDER RECOVERY OF GUEST HOUSE EXPENSES RS.72,30,225 THE LEARNED CIT (A) ERRED IN REJECTING APPELLANTS CLAIM THAT RECOVERIES MADE IN RESPECT OF GUEST HOUS E EXPENSES, ON WHICH RULE 6D SHOULD APPLY AND EXPENSE S PROPORTIONATELY DISALLOWED AND NOT THE ENTIRE AMOUNT AS GUEST HOUSE EXPENSES. 2 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. GROUND OF APPEAL NO.4 PAGES 6-7, PARAS 7.7.2 OF CIT (A)S ORDER EXPENSES INCURRED ON DARJEELING HOME RS.2,75,750 THE LEARNED CIT (A) ERRED TREATING DARJEELING HOLID AY HOME AS GUEST HOUSE AND REJECTING APPELLANTS CONTENTION THAT THE SAME IS COVERED BY THE SECOND P ROVISO TO SECTION 37(4) HENCE NOT TO BE TREATED AS GUEST HOUSE. GROUND OF APPEAL NO.5 {PAGE 7, PARAS 8-8.2 OF CIT (A)S ORDER EXPENSES INCURRED ON BUSINESS MEETINGS AND CONFEREN CES- RS.82,51,399 THE LEARNED CIT (A) ERRED IN HOLDING 50% EXPENDITUR E ON AD HOC BASIS ON BUSINESS MEETINGS AND CONFERENCES OF EMPLOYEES AS ENTERTAINMENT EXPENDITU RE INCURRED UNDER THE PROVISIONS OF SECTION 37(2A) OF THE INCOME-TAX ACT. GROUND OF APPEAL NO.6 PAGES 7-8, PARAS 9.9.2 OF CIT (A)S ORDER ANNUAL GENERAL MEETING EXPENSES - RS.3,90, 631 THE LEARNED CIT (A) ERRED IN TREATING EXPENDITURE A T AGM IN THE NATURE OF ENTERTAINMENT EXPENDITURE, HENCE DISALLOWING THE SAME. THE LEARNED CIT(A) INAD VERTENTLY MENTIONED THE AMOUNT AS RS. 2,75,750/- INSTEAD OF RS. 3,90,631/-. GROUND OF APPEAL NO.7 PAGES 10-12, PARAS 12-12.3 OF CIT (A)S ORDER EXPENDITURE ON TECHNO FEASIBILITY REPORTS- RS.23,19,200 THE LEARNED CIT (A) ERRED IN DISALLOWING FEASIBILIT Y STUDIES AS CAPITAL EXPENDITURE, NOT RELATED TO TH E BUSINESS OF THE APPELLANT, WHEN THE SAME WERE UNDER TAKEN FOR THE PURPOSES OF BUSINESS AND TO IMPROVE THE QUALITY AND PROFITABILITY OF ITS OPERATIONS. GROUND OF APPEAL NO.8 PAGES 13-14,PARAS 14-14.2 OF CIT (A)S ORDER DISALLOWANCE OF CONTRIBUTION TO TATA STEEL RURAL DE VELOPMENT SOCIETY- RS.3 ,26,,25,460 THE LEARNED CIT (A) FAILED TO APPRECIATE THE CIRCUM STANCES IN WHICH EXPENDITURE THROUGH THE MEDIUM OF TSRDS WAS INCURRED AND IN TREATING THE SAME AS NON- BUSINESS EXPENDITURE. GROUND OF APPEAL NO.9 PAGE 14-15,PARAS 15-15.2 OF CIT (A)S ORDER CONTRIBUTION TO TATA SPORTS CLUB RS.6,53,471 THE LEARNED CIT (A) ERRED IN HOLDING THAT CONTRIBUT ION TO TATA SPORTS CLUB IS COVERED BY THE PROVISION S OF SECTION 40A(9). GROUND OF APPEAL NO.10 PAGES 15-18, PARAS 16-16.2.4 OF CIT (A)S ORDER CONTRIBUTIONS TO INSTITUTIONS IN JAMSHEDPUR RS. 1,37,96,407 THE LEARNED CIT (A) ERRED IN DISALLOWING CONTRIBUTI ONS TO INSTITUTIONS ON THE GROUND THAT SUCH EXPENDITURE WAS NOT INCURRED FOR THE PURPOSES OF TH E BUSINESS, HAVING FAILED TO UNDERSTAND THE SCENARI O THAT ESTABLISHES NEXUS BETWEEN THE CONTRIBUTIONS MA DE AND THE BUSINESS OF THE APPELLANT. GROUND OF APPEAL NO.11 PAGES 18, PARAS 17-17.2 OF C IT(A)S ORDER CONTRIBUTION TO INSTITUTE FOR MINERS & METAL WORKER S EDUCATION. RS. 7,50,000 THE LEARNED CIT(A) ERRED IN DISALLOWING THE SAID EX PENDITURE BY TRAINING AS CONTRIBUTION AND NOT INCURRED FOR THE PURPOSES OF BUSINESS. GROUND OF APPEAL NO.12 PAGES 19-25, PARAS 19-19.3 O F CIT(A)S ORDER LIABILITY UNDER EMPLOYEE SEPARATION SCHEMES INITIAT ED DURING THE YEAR. RS. 290,70,50,553 THE LEARNED CIT(A) ERRED IN NOT COMING TO CONCLUSIO N THAT THE LIABILITY OF ESS PENSIONS CRYSTALLIZES DURING THE YEAR EMPLOYEE OPTS FOR THE SCHEME. THE L EARNED CIT(A) ERRED IN NOT REALIZING THAT THERE IS NO UNCERTAINTY IN MAKING PAYMENTS TO SUCH EMPLOYEES AS COMPANY IS CONTRACTUALLY BOUND TO MAKE MONTHLY PENSIONS TILL THE AGE OF SUPERANNUATION. THE LEARNE D CIT(A) ERRED IN TREATING ESS PAYMENTS SIMILAR TO CONTRIBUTIONS MADE TO SUPERANNUATION FUND WHERE DED UCTION IS ALLOWED ON PAYMENT BASIS U/S.43B. GROUND OF APPEAL NO.13 PAGES 28-29, PARAS 21-21.2 O F CIT(A)S ORDER CONTRIBUTION TO APPROVED SUPERANNUATION FUND- RS. 62,27,508 THE LEARNED CIT(A) ERRED IN NOT CONDONING DELAY IN MAKING CONTRIBUTION AS PER THE FACTS OF THE CASE. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR A MEND THE ABOVE GROUNDS OF APPEAL. AO HAS FILED FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED IN ALLOWING RELINING EXPENDITU RE OF RS. 20,25,71,077/- AS REVENUE IN NATURE WITHOUT APPRECIATING THE FACT THAT IT GIVES THE ASS ESSEE ADVANTAGE OF ENDURING NATURE. 3 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. DURING THE COURSE OF HEARING BEFORE US,AUTHRORISED REPRESENTATIVE(AR)OF THE ASSESSEE DID NOT PRESS GROUNDS NO.1, 2 AND 4,HENCE,SAME STAND DISMIS SED AS NOT PRESSED. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING AND SALE OF IRON AND STEEL MATERIALS,FILED ITS RETURN OF INCOME ON 29.11.1996 DECLARING TOTAL LOSS AT RS. 589,65,04,270/- AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT ON 3 0.03.1999,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 151,94,06,296/-. FIRST WE WOULD TAK E UP THE APPEAL FILED BY THE ASSESSEE. ITA/4118/MUM/2005-AY.1996-97 2.G ROUND OF APPEAL NO.3 IS ABOUT RECOVERY OF GUEST HOU SE EXPENSES AMOUNTING TO RS.72,30,225/- DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE HAD MAINTAINED GUEST HOUSES AT VARIOUS PLACES INCLUDING JAMSHEDPUR AND VELLOR,THAT IT HAD SHOWED RECOVERY OF RS.72.30 LAKHS FROM THE EMPLOYEES WHILE MAKING DISALLOWANCE UNDER THE HEAD GUEST HOUSE EXPENSES.AO REJECTED THE CLAIM MADE BY THE ASSESSEE. 2.1. IN THE APPELLATE PROCEEDINGS,BEFORE THE FIRST APPEL LATE AUTHORITY(FAA),ASSESSEE SUBMITTED THE AMOUNT SHOWN AS RECOVERIES AND RECORDING ENTRIES SH OULD BE NOT BE CONSIDER FOR DISALLOWANCE. FOLLOWING THE ORDERS OF HER PREDECESSOR FOR THE AY. 1995-96 AND EARLIER YEARS,FAA HELD THAT DISALLOWANCE MADE BY THE AO WERE JUSTIFIED.SHE ALSO RELIED UPON THE ORDER OF THE SPECIAL BENCH DELIVERED IN THE CASE OF EICHER TRACTORS LTD.(261IT R-AT,42)IN THIS REGARD. 2.2. BEFORE US,REPRESENTATIVES OF BOTH THE SIDES STATED THAT ISSUE IN COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DELIVERED FO R EARLIER YEARS.WE FIND THAT ISSUE OF RECOVERY OF GUEST HOUSE EXPENSES HAS BEEN DEALT BY THE TRIBUNAL FOR AY.S.1991-92,1994-95,1995- 96(ITA/3968-70/ MUM/2003,DATED 02.04.2014) AS UNDER : 4.2. BEFORE US,BEFORE US REPRESENTATIVES OF BOTH THE SID ES ADMITTED THAT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL WHILE ADJUDI CATING APPEAL FOR THE AY.1985-86.WE FIND THAT TRIBUNAL IN ITS ORDER DATED 27.02.2009(SUPRA),IN PA RAGRAPHS 12-13,HAS HELD AS UNDER: AS FAR AS GROUND NO. 4 IS CONCERNED, ON SIMILAR ISS UE THE HONBLE ITAT, MUMBAI IN ASSESSEES OWN CASE IN A.Y. 1992-93 IN I.T.A. NO. 7121/MUM/96 HAS HELD AS FOLLOWS: ADMITTEDLY RECOVERIES HAVE BEEN MADE FROM THE PARE NT DEPARTMENTS OF THE COMPANY WHOSE PERSONS UTILISED THE FACILITIES OF THE GUEST HOUSE IN THE COURSE OF OFFICIAL WORK RELATING TO THE BUSINESS OF THE COMPANY.ASSUMING TH E SITUATION OF NON-EXISTENCE OF THE GUEST HOUSE OF THE COMPANY IN THAT PLACE, THEN, SUC H EMPLOYEES WOULD HAVE STAYED IN A HOTEL OR GUEST HOUSE RUN BY THIRD PARTIES AND MADE PAYMENTS TO THEM FOR USE OF THEIR FACILITIES AND ACCORDINGLY PAYMENTS MADE TO OUTSIDE PARTIES WOULD HAVE BEEN TREATED AS TRAVELLING EXPENSES INCURRED BY THE COMPANY FOR ITS BUSINESS. THEREFORE, THE USER OF GUEST HOUSE FACILITIES PROVIDED BY THE COMPANY TO THE EMP LOYEES OF THE COMPANY IN CONNECTION WITH DISCHARGE OF THEIR OFFICIAL DUTIES DOES NOT AL TER THE BASIC CHARACTER OF THE EXPENDITURE.ULTIMATELY SUCH EXPENSES ARE CONNECTED WITH THE TRAVELLING BY SUCH EMPLOYEES AND, THEREFORE, SHOULD BE TREATED ACCORDINGLY, IRRE SPECTIVE OF THE FACT THAT SUCH EMPLOYEES STAYED IN THE GUEST HOUSE OF THE COMPANY.IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES,WE DIRECT THE AO TO ALLOW THE DEDUCTION OF AMOUNT RECE IVED FROM PARENT DEPARTMENTS AS EXPENDITURE IN THE NATURE OF TRAVELLING EXPENSES ;A ND IN ACCORDANCE WITH RULE 6D OF THE IT RULES.THUS THIS GROUND OF THE ASSESSEE IS ACCEPTED. 13.IN VIEW OF THE ABOVE, WE DIRECT THAT THE ADDITIO N TO THE EXTENT OF RECOVERIES MADE BY THE ASSESSEE BE ALLOWED AS A DEDUCTION. GROUND NO. 4 OF THE ASSESSEE IS ALLOWED. RESPECTFULLY,FOLLOWING THE ABOVE GROUND NO.4 IS DECIDED IN FAVOUR OF THE ASSES SEE. CONSIDERING THE ABOVE ISSUE OF GUEST HOUSE EXPENSES IS DECIDED IN FAVOUR OF THE ASSESSEE. FOLLOWING THE ORDERS FOR THE EARLIER AY.S,W E DECIDE GROUND NO.2 FOR ALL THE THREE AY.S IN FAVOUR OF THE ASSESSEE. AS THE ISSUE OF RECOVERY OF GUEST HOUSE EXPENSES HA S ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN EARLIER YEARS,SO,WE ALLOW GROUND NO.2.F ILED BY THE ASSESSEE FOR THE YEAR UNDER APPEAL. 4 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. 3. GROUND NO.5 PERTAINS TO EXPENSES(RS.82,51,399/-)INC URRED ON BUSINESS MEETINGS AND CONFERENCES. IN THE APPELLATE PROCEEDINGS,FAA HELD THAT SIMILAR ISSUE HAD ARISEN IN THE CASE OF THE ASSESSEE IN THE AY.1995-96 ALSO,THAT THE THEN FAA HAD UPHELD TH E DISALLOWANCE,THAT THE FACTS OF THE ISSUE WERE IDENTICAL,THAT THE DISALLOWANCE FOR THE YEAR U NDER CONSIDERATION HAD TO BE UPHELD. 3.1. DURING THE COURSE OF HEARING,AR ADMITTED THAT IN TH E EARLIER YEARS EXPENSES INCURRED ON BUSINESS MEETINGS AND CONFERENCES WAS DECIDED AGAIN ST THE ASSESSEE.WE FIND THAT WHILE DECIDING THE ISSUE UNDER APPEAL IN THE YEARS 1991-92,1994-95 ,1995-96(SUPRA),WE HAVE HELD AS UNDER: 5.2. BEFORE US,AR AGREED THAT THE ISSUE WAS DECIDED AGAI NST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL FOR EARLIER AY.S.WE FIND THAT IDENTICAL IS SUE,FOR THE AY.S.1987-88,1989-09 AND 1990- 91(SUPRA),WAS DEALT BY THE TRIBUNAL AS UNDER: 8.2. BEFORE US, REPRESENTATIVES OF BOTH THE SIDES AGREED THAT WHILE ADJUDICATING THE APPEAL FOR THE AY.1985-85(SUPRA),TRIBUNAL HAD DECIDED THE MATTER A GAINST THE ASSESSEE-COMPANY. WE FIND THAT APPEAL FILED BY THE ASSESSEE WITH REGARD TO DISALLO WANCE OF EXPENDITURE ON BUSINESS MEETINGS AND CONFERENCES OF THE EMPLOYEES,WAS DEALT BY THE TRIBU NAL AS UNDER,IN PARAGRAPHS 27-30 AS UNDER : 27.WE HAVE CONSIDERED HIS SUBMISSIONS.ON THIS ISSU E THE LEARNED CIT(A) HAS HELD AS FOLLOWS: AS PER EXPLANATION 1 TO SECTION 37(2A), THE ENTERTAINM ENT EXPENDITURE INCLUDES THE AMOUNT OF ANY DISALLOWANCE IN THE NATURE OF ENTERTAINMENT ALLOWAN CE PAID TO THE EMPLOYEE. FURTHER THE ENTERTAIN -MENT EXPENDITURE ALSO INCLUDES THE EXPENDITURE INC URRED BY THE EMPLOYEE FOR THE PURPOSE OF BUSINESS OR PROFESSION.EXPLANATION 2 TO SECTION 37( 2A) IS MATERIAL FOR THE PURPOSE OF THE PRESENT ISSUE. EXPLANATION 2 TO SECTION 37(2A) WAS INTRODUC ED BY THE FINANCE ACT, 1983 WITH RETROSPECTIVE EFFECT FROM 1ST,APRIL,1976.THE RELEVANT EXPRESSION OTHER PLACE OF THEIR WORK IN EXPLANATION 2 IS AS FOLLOWS: FOR THE REMOVAL OF DOUBTS IT IS HEREBY DECLARED TH AT FOR THE PURPOSE OF THIS SUBSECTION ... ENTERTAINMENT EXPENDITURE INCLUDES EXPENDITURE ON P ROVISION OF HOSPITALITY OF EVERY KIND BY THE ASSESSEE TO ANY PERSON BUT DOES NOT INCLUDE EXPENDI TURE ON FOOD OR BEVERAGES PROVIDED BY THE ASSESSEE TO HIS EMPLOYEES IN OFFICE, FACTORY OR OTH ER PLACE OF THEIR WORK. IT IS CLEAR FROM THE ABOVE EXPLANATION 2 TO SECTION 37(2A)/37(2) THAT THE EXPENDITURE INCURRED ON THE HOSPITALITY OF EMPLOYEES GETS EXCLUDED FROM THE DEFINITION OF THE ENTERTAINMENT EXPENDITURE PROVIDED THE EXPENDITURE IS INCURRED IN OFFICE, FAC TORY OR OTHER PLACE OF THEIR WORK. IN THE PRESENT CASE,IT IS AN ACCEPTED POSITION THAT THE EXPENDITUR E WAS INCURRED IN THE HOTELS.THE ASSESSEES CONTENTION IS IOTELS FALL WITHIN THE MEANING OF OT HER PLACE OF THEIR WORK.I AM UNBLE TO AGREE WITH THE INTERPRETATION GIVEN BY THE APPELLANT. EXPLANAT ION 1 AND 2 TO SECTION 37(2A) IT CAN BE SEEN THAT THE EXPENDITURE INCURRED BY THE EMPLOYEES FORMS PAR T TO DEFINITION OF ENTERTAINMENT EXPENDITURE.EXPLANATION 2 DOES NOT TREAT EXPENDITUR E ON FOOD OR BEVERAGES PROVIDED BY THE ASSESSEE TO THE EMPLOYEES IN OFFICE, FACTORY OR OTH ER PLACE OF THEIR WORK AS ENTERTAINMENT EXPENDITURE.THE EXPENDITURE WAS NOT INCURRED EITHER IN OFFICE OR IN FACTORY. THE EXPENDITURE INCURRED ON ENTERTAINMENT AT HOTELS ATTRIBUTABLE TO EMPLOYEES CANNOT BE BROUGHT UNDER THE EXPRESSION OTHER PLACE OF THEIR WORK. THIS EXPRES SION HAS TO BE INTERPRETED IN THE CONTEXT IN WHICH OTHER WORDS PRECEDING THE EXPRESSION WERE USE D. THE OTHER WORDS USED ARE OFFICE OR FACTORY. IN MY VIEW, OTHER PLACE OF THEIR WORK HAS TO BE SIMILAR TO OFFICE OR FACTORY. NORMALLY, THE EXPRESSION OTHER PLACE OF THEIR WORK INCLUDES PLACES SUCH AS MINE, WORK SITE, DRILLING SITE, GODOWN ETC. BUT CERTAINLY THE EXPRES SION DOES NOT INCLUDE EXPENDITURE INCURRED AT A PLACE OTHER THAN THE PLACE AT WHICH AN EMPLOYEE NOR MALLY WORKS. THE PRINCIPLE OF EJUSDEM GENERIC WARRANTS THAT OTHER PLACE OF WORK SHOULD BE AKIN TO OFFICE OR FACTORY AND IT CANNOT BE TAKEN TO INCLUDE HOTEL OR RESTAURANT. THE EXPENDITURE INCURR ED BY THE APPELLANT WAS TOWARDS FOOD OR BEVERAGES. IN MY VIEW, THE EXPENDITURE INCURRED ON THE EMPLOYEES AT A PLACE OTHER THAN OFFICE OR FACTORY REQUIRES TO BE TREATED AS ENTERTAINMENT EXP ENDITURE. THE HOTEL OR RESTAURANT CANNOT BE TREATED AS ANY OTHER PLACE OF THEIR WORK. I AM AL SO NOT ABLE TO AGREE WITH THE CONTENTION THAT A LARGE NUMBER OF EMPLOYEES HAD ATTENDED THE BUSINESS MEETINGS. AS OBSERVED EARLIER, THE SWEEP OF THE WORDS ENTERTAINMENT EXPENDITURE FOUND IN EXPLAN ATION IS WIDE AND BROAD TO COVER EVERY EXPENDITURE ON PROVISION OF HOSPITALITY OF EVERY KI ND TO EMPLOYEES ALSO,PROVIDED THE EXPENDITURE IS NOT INCURRED IN OFFICE OR FACTORY OR ANY OTHER PLAC E OF THEIR WORK WHERE AN EMPLOYEE NORMALLY DISCHARGES HIS DUTIES. IN MY VIEW, THE HOTEL CANNOT BE EQUATED WITH THE OTHER PLACE OF THEIR 5 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. WORK.THE APPELLANT;RELIED ON THE CIT(A)S ORDER FOR A.Y. 1988-89.I AM NOT ABLE TO AGREE WITH THE INTERPRETATION OF THE PROVISIONS GIVEN BY THE CIT(A ) IN A.Y.1988-89. IN MY VIEW, THE EXPENDITURE IS COVERED BY THE DEFINITION OF THE CTT(A) ENTERTAINME NT EXPENDITURE.THE APPELLANT ; ALSO SUBMITTED THAT IN A.Y.50% OF THE EXPENDITURE INCURRED ON THE BUSINESS MEETINGS AND CONFERENCES WAS TREATED AS ENTERTAINMENT EXPENDITURE AND THE REMAINING EXPE NDITURE WAS RENT PAID FOR THE HALLS IN HOTELS.THE APPELLANT DID NOT PLACE ANY EVIDENCE,BEF ORE ME TO ESTABLISH THE FACT EXPENDITURE INCURRED ON BUSINESS MEETINGS AND CONFERENCES CONTA INED THE RENT PAID FOR THE HALLS IN THE HOTELS.IN THE ABSENCE OF EVIDENCE,I REFRAIN MYSELF FROM GIVING ANY FINDING ON THIS ARGUMENT. HOWEVER, KEEPING IN MIND ;THE PRINCIPLES OF NATURAL JUSTICE, THE A.O. IS DIRECTED TO EXAMINE AND ALLOW IF THE ASSESSEE IS ABLE TO FURNISH THE EVIDEN CE OF RENT PAID TO THE HOTELS OR RESTAURANTS WHICH WAS INCLUDED IN THE BUSINESS MEETINGS AND CONFERENC ES EXPENDITURE.TO SUM UP, THE EXPENDITURE INCURRED ON THE BUSINESS MEETINGS AND CONFERENCES A T THE HOTELS FALLS WITHIN THE DEFINITION OF ENTERTAINMENT EXPENDITURE.THE ADDITIONS MADE BY THE AO ARE SUSTAINED SUBJECT TO SUBMISSION AND VERIFICATION OF EVIDENCE OF RENT PAID. 28.WE AGREE WITH THE REASONING GIVEN BY THE CIT(A) IN THE LIGHT OF THE PROVISIONS OF EXPLANATION 2 TO SECTION 37(2A) OF THE ACT. WE HAVE ALSO CONSIDER ED THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE.THE DECISION OF HONBLE CA LCUTTA HIGH COURT IN THE CASE OF CHEMCROWN (I) LTD. (SUPRA) IS DISTINGUISHABLE AS FOLLOWS:THE EMPLOYEES AND CUSTOMERS PARTICIPATED IN THE ENTERTAINMENT WHEREAS IN THE CASE OF THE ASSESSEE T HE EMPLOYEES ALONE PARTICIPATED. 29.THE DECISION IN THE CASE OF EXPO MACHINERY LTD. (SUPRA) BY HONBLE DELHI HIGH COURT IS ALSO DISTINGUISHABLE AS FOLLOWS: IT WAS A CASE OF EMPLOY EES PARTICIPATION WHILE ENTERTAINING GUESTS AND THE ISSUE OF PLACE OF WORK IN THE CONTEXT OF EXPLAN ATION 2 TO SECTION 37(2A) WAS NOT CONSIDERED BY THE HONBLE COURT. IN THE PRESENT CASE THE EMPLOYEE S ALONE PARTICIPATED IN THE ENTERTAINMENT AND THERE WERE NO CUSTOMERS AND GUESTS. 30.WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) A ND DISMISS GROUND NOS. 8 TO 10. RESPECTFULLY FOLLOWING THE ABOVE,WE DECIDE GROUND N O.8 AGAINST THE ASSESSEE. FOLLOWING THE ABOVE G.6/G.7 FOR THE AY.S1987-88,198 9-90 AND 1990-91 RESPECTIVELY ARE DECIDED AGAINST THE ASSESSEE -COMPANY. CONSIDERING THE ORDERS FOR THE EARLIER YEARS (SUPRA )WE DECIDE THE ISSUE AGAINST THE ASSESSEE- COMPANY. GROUND NO.5 IS DECIDED AGAINST THE ASSESSEE,IN VIEW OF THE EARLIER YEARS ORDERS. 4. NEXT GROUND OF APPEAL IS ABOUT DISALLOWANCE OF RS.3 ,90,631/-UNDER THE HEAD ANNUAL GENERAL MEETING EXPENSES.IT WAS BROUGHT TO OUR NOTICE THAT THERE WAS TYPOGRAPHICAL MISTAKE IN THE ORDER OF THE FAA-THE AMOUNT IN DISPUTE WAS RS.3.90 LAKHS AND NOT RS.2,75,750/-AS MENTIONED BY HER.AO HAD DISALLOWED THE AGM EXPENSES PERTAINING T O THE SHAREHOLDERS AND FAA,FOLLOWING THE ORDER FOR THE AY.1995-96,UPHELD HIS ORDER. 4.1. BEFORE US,AR FAIRLY CONCEDED THAT TRIBUNAL HAD CONF IRMED THE ORDER OF THE FAA IN THE AY. 1990-91,1994-95 AND 1995-96 WHEREIN SIMILAR DISALLO WANCE MADE BY THE AO WERE UPHELD BY THE FAA.WE FIND THE ISSUE OF AGM EXPENSES WAS DECIDED B Y THE US IN THE ORDER DATED (SUPRA) AS UNDER : 4. THIRD COMMON GROUND OF APPEAL(GROUND NO.4 FOR 1991- 92 AND GROUND NO.3 FOR1994- 95AND1995-96)IS ABOUT DISALLOWANCE OF AGM EXPENSES OF THE SHAREHOLDERS.AO.S HAD MADE DISALLOWANCES OF RS.87,240/-,RS.1,45,674/- AND RS. 1,98,161/-RESPECTIVELY FOR THE AY.S UNDER APPEAL U/S.37(2A) / 37 (2)OF THE ACT AND THE FAA HA D UPHELD THEIR ORDERS. 4.1. AR AGREED THAT ISSUE WAS DECIDED AGAINST THE ASSESS EE BY THE TRIBUNAL IN THE ORDERS FOR EARLIER AY.S.WE FIND THAT IN THE ORDER FOR THE AY.S.1987-88 ,1989-09 AND 1990-91 (SUPRA),TRIBUNAL HAD DECIDED THE ISSUE AS UNDER: 17.THE VERY SAME ISSUE AROSE FOR CONSIDERATION IN ASSESSEES OWN CASE IN A.Y. 1988-89 IN I.T.A. NO.3222/ MUM/92 AND THIS TRIBUNAL HAS TAKEN A VIEW THAT SERVING OF TEA,COFFEE AND SOFT DRINKS TO SHAREHOLDERS AT ANNUAL GENERAL MEETING IS NOT EXPEN DITURE IN THE NATURE OF ENTERTAINMENT BY FOLLOWING THE RULING TO THAT EFFECT IN THE CASE OF CIT VS. MYSORE MINERALS LTD.,126 ITR 437(KAR). 6 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. THE LEARNED CIT(A)HAS,HOWEVER, DISTINGUISHED THE DE CISION IN THE CASE OF MYSORE MINERALS LTD. (SUPRA) AS FOLLOWS: - THE DEFINITION OF ENTERTAINMENT EXPENDITURE WAS I NSERTED BY THE FINANCE ACT,1983 WITH RETROSPECTIVE EFFECT FROM 1.4.1976. IN MY VIEW, THE EXPENDITURE INCURRED ON SERVING TEA, COFFEE AND SOFT DRINKS IS COVERED BY THE EXPLANATION 2 TO SECTION 37(2A)/(37(2). IN THE EXPLANATION 2 IT IS STIPULATED THAT THE EXPENDITURE ON PROVISION OF HOSPITALITY OF EVERY KIND BY THE ASSESSEE TO ANY PERSON WHETHER BY WAY OF PROVISION OF FOOD OR BEVER AGES OR IN ANY OTHER MANNER, WHATSOEVER, WOULD BE ENTERTAINMENT EXPENDITURE.THE SWEEP OF THE WORDS ENTERTAINMENT EXPENDITURE FOUND IN THE EXPLANATION 2 TO SECTION 37(2A)IS WIDE AND BROA D TO COVER EVERY EXPENDITURE ON PROVISION OF HOSPITALITY OF EVERY KIND TO ANY PERSON OTHER TH AN THE EMPLOYEES AT THE PLACE OF THEIR WORK THE APPELLANT RELIED ON THE JUDGMENT OF THE KARNATA KA HIGH COURT IN THE CASE OF BANGALORE TURF CLUB LTD 126 ITR 430.THE HONBLE KARNATAKA HIG H COURT IN A LATER JUDGMENT IN THE CASE OF MYSORE MINERALS LTD 162 ITR 562 DID NOT APPROVE THE RATIO LAID DOWN IN BANGALORE TURF CLUB ON THE GROUND THAT THE EXPLANATION 2 TO SUBSE CTION (2A) OF SECTION 37 WAS NOT THERE IN THE STATUTE WHEN THE JUDGMENT IN THE CASE OF BANGALORE TURF CLUB WAS DELIVERED.THUS, THE KARNATAKA HIGH COURT OVERRULED ITS OWN DECISION IN BANGALORE TURF CLUB IN THE CASE OF MYSORE MINERALS LTD. (SUPRA). HONBLE KARNATAKA HIG H COURT HAS CATEGORICALLY STATED THAT THE EXPENDITURE INCURRED AT THE GENERAL BODY MEETING IS COVERED BY THE EXPLANATION 2 TO SECTION 37(2A). RESPECTFULLY FOLLOWING THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF MYSORE MINERALS LTD.(SUPRA)THE DISALLOWANCE MADE BY THE AO U/S. 37 (2A)/37(2)IS UPHELD.TO SUM UP, THE EXPENDITURE INCURRED ON SERVING TEA, COFFEE & S OFT DRINKS TO THE SHAREHOLDERS AT THE ANNUAL GENERAL MEETING IS TREATED AS ENTERTAINMENT EXPENDI TURE. THE ACTION OF THE AO IS UPHELD. 18.IN VIEW OF THE ABOVE DECISION OF THE HONBLE KAR NATAKA HIGH COURT, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS GROUND NO. 6 OF THE ASSESSEE . FOLLOWING THE ABOVE G.4 AND G.5,FOR THE AY.1987-88 AND REMAINING TWO AY.S,STAND DISMISSED. CONSIDERING THE ABOVE WE DECIDE THE ISSUE OF DISALL OWANCE OF AGM EXPENSES OF THE SHAREHOLDERS AGAINST THE ASSESSEE FOR ALL THE THREE AY.S. FOLLOWING OUR ORDER FOR THE EARLIER YEARS,WE DECIDE GROUND NO.6 AGAINST THE ASSESSEE. 5. EXPENDITURE ON TECHNO FEASIBILITY REPORTS,AMOUNTING TO RS.RS.23,19,200/-,IS THE SUBJECT MATTER OF THE NEXT GROUND OF APPEAL.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE HAD INCURRED RS.5 LAKHS,2.56 LAKHS AND 15.62 LAKHS RESP ECTIVELY FOR PREPARATION OF FEASIBILITY REPORT FOR INSTALLATION OF FERRO CHROME PLANT,ON ACCOUNT OF CO NSULTANCY FEES FOR A JOINT VENTURE IN THE FIELD OF HYDRAULICS AND FOR REGIONAL ENVIRONMENT STUDIES FOR JAMSHEDPUR,RESPECTIVELY.AO HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS OF CAPITAL NATURE.IT WAS FURTHER HELD THAT THESE STUDIES WERE NOT UNDERTAKEN WHOLLY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE OR TO IMPROVE THE PROFITABILITY. 5.1. IN THE APPELLATE PROCEEDINGS,FAA HELD EXPENDITURE I N REPORTS AND STUDIES WAS NOT INCURRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE OR FACI LITATING THE EXISTING MANUFACTURING BUSINESS OF THE ASSESSEE,THAT EXPENDITURE ON INSTALLATION OF FE RRO CHROME PLANT WAS OF CAPITAL NATURE,THAT OTHER TWO ITEMS WERE NOT FOR BUSINESS PURPOSES. 5.2. BEFORE US,AR SUBMITTED THAT SIMILAR KIND OF EXPENDI TURE IN THE EARLIER YEARS WAS ALLOWED BY THE TRIBUNAL,WHEREIN FAA HAD CONFIRMED THE ADDITION S MADE BY THE AO IN SIMILAR FASHION.DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH.WE FIND TH E IN THE EARLIER AY.S.,WE HAVE DEALT THE ISSUE AS UNDER: 9. NEXT COMMON GROUND OF APPEAL(G.12-1991-92,G.9-1994- 95)IS ABOUT FEES PAID TO CONSULTANTS FOR FEASIBILITY STUDIES.AO.S FOUND THAT THE ASSESS EE HAD PAID RS.4.83 LAKHS AND RS.24.94 LAKHS TO THE CONSULTANTS FOR CONDUCTING FEASIBILITY STUDIES FOR THE YEARS UNDER APPEAL.AO.S WERE OF THE OPINION THAT THE EXPENDITURE WAS INCURRED IN CONNEC TION WITH THE EXPANSION OF THE INDUSTRIAL UNDERTAKING, THAT SAME WAS CAPITAL EXPENDITURE,THA T THE EXPENDITURE INCURRED ON PREPARATION OF FEASIBILITY/ PROJECT REPORTS IN CONNECTION WITH THE EXPANSION OF INDUSTRIAL UNDERTAKINGS OR IN CONNECTION WITH THE SETTING UP OF A NEW UNITS WAS A N ADMISSIBLE DEDUCTION U/S.35D OF THE ACT. 7 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. 9.1. IN THE APPELLATE PROCEEDINGS,UPHOLDING THE ORDER OF THE AO.S,FAA HELD THAT THE EXPENDITURE INCURRED WAS IN THE CAPITAL FIELD.WE FIND THAT IDEN TICAL ISSUE HAS BEEN DECIDED BY US,WHILE ADJUDICATING THE APPEALS FOR THE EARLIER THREE AY.S .I.E.-AY.S.1987-88,1989-09 AND 1990- 91(SUPRA)IN THE FOLLOWING MANNER: BEFORE US,AR AND DR AGREED THE IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER FOR THE AY.1986-87.WE FIND THAT IN THE EARLIER AY., ISSUE OF EXPENDITURE INCURRED FOR MAKING PAYMENTS TO CONSULTANTS FOR FEASIBILITY STUDIES,HAS BEEN DEALT IN FOLLOWING MANNER: 16.2. BEFORE US,AR SUBMITTED THAT SIMILAR ISSUE WAS DECID ED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING AY.DR DID NOT CONTROVERT THE FACT.WE FIND THAT IN THE AY.1985-86 ASSESSEE HAD PAID FEES FOR FEASIBILITY STUDY TO THE SAME CONSULTANT TO WHO M FESS WAS PAID DURING THE YEAR ALSO.WHILE DECIDING THE APPEAL,TRIBUNAL AT PARAGRAPH 38 HAS HE LD AS UNDER: WE HAVE PERUSED THE DETAILS OF THE EXPENSES.A SUM OF RS.10 LAKHS WAS PAID FOR MODERNI -SATION PROJECT PHASE-I.A SUM OF RS.2 LAKHS AND RS.3 LAKHS WAS PAID FOR PROJECT REPORT FOR FEASIBILITY OF PLASTIC LINES AND COATED PIPES AND REVAMPING THE ER W MILL RESPECTIVELY.IN AY.1968-69 IN I.T.A. NO.2068/BOM/74-75 THE HONBLE ITAT IN ASSESSEES OW N CASE CONSIDERED EXPENDITURE ON REPORT FOR INCREASING PRODUCTION CAPACITY AND FUTURE DEVEL OPMENT.AFTER ELABORATE DISCUSSION, THE TRIBUNAL CAME TO THE CONCLUSION THAT EXPENDITURE WAS NOT A C APITAL EXPENDITURE AND ALLOWED DEDUCTION OF SAME AS A REVENUE EXPENDITURE.FACTS AND CIRCUMSTANC ES BEING IDENTICAL IN THIS YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL, WE HOLD THA T THE EXPENDITURE IN QUESTION HAS TO BE ALLOWED AS A DEDUCTION BEING A REVENUE EXPENDITURE.GROUND N O. 12 IS ALLOWED. FOLLOWING THE ABOVE,WE DECIDE GROUND NO .16,BEFORE US,IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE,G.14/G.13 FOR THE AY.S UNDER A PPEAL ARE DECIDED IN FAVOUR OF THE ASSESSEE . FOLLOWING OUR ORDERS FOR THE EARLIER YEARS, WE DECI DE THE ISSUE OF PAYMENT OF FEES TO THE CONSULTANTS FOR CONDUCTING FEASIBILITY REPORT IN FA VOUR OF THE ASSESSEE. IN VIEW OF THE DECISION OF EARLIER YEARS,GROUND NO. 7 IS DECIDED IN FAVOUR OF THE ASSESSEE. 6. GROUND NO.8 DEALS WITH DISALLOWANCE(RS.3,26,25,460/ -) OF CONTRIBUTION MADE TO TATA STEEL RURAL DEVELOPMENT SOCIETY(TSRDS).AO WAS OF THE OPINION TH AT THE AMOUNT EXPENDED THROUGH TSRDS WAS AN ACT OF PHILANTHROPY,THAT EXPENDITURE WAS NOT LAID WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. IN THE APPELLATE PROCEEDINGS,FAA FOLLOWING THE ORDE R FOR THE AY.1995-96 AND REFERRING TO THE DECISIONS OF STANDARD MILLS CO.LTD.(209ITR85)AND VO LTAS LTD.(207ITR)UPHELD THE ORDER OF THE AO. 6.1. BEFORE US,AR CONTENDED THAT ISSUE HAD ARISEN IN EAR LIER AY.S.ALSO AND WAS DECIDED IN FAVOUR OF THE ASSESSEE.WE FIND THAT IN OUR ORDER DATED (SUPRA) FOR THE AY.S.1990-91,1994-95 AND 1995-96 WE HAVE DECIDED THE ISSUE AS UNDER 6. DISALLOWANCE OF TATA STEEL RURAL DEVELOPMENT SOCIET Y EXPENDITURE(TSRDS)-G.9-1991-92,G.5- 1994-95,G.4-1995-96)IS THE NEXT COMMON GROUND OF AP PEAL FOR THE YEARS UNDER CONSIDERATION.AS PER THE AO.S,ASSESSEE HAD CLAIMED EXPENDITURE ON RU RAL DEVELOPMENT IN THE ASSESSMENT YEARS UNDER CONSIDERATION,AS BUSINESS EXPENDITURE U/S. 37 (1) OF THE ACT,THAT THE ASSESSEE HAD CLAIMED THAT IT HAD INCURRED EXPENDITURE ON PAYMENT TO TSRD S AMOUNTING TO RS.2CRORES,RS.2.93CRORES AND RS.2.99 CRORES RESPECTIVELY FOR THE YEARS UNDER APPEAL.AO.S WERE OF THE OPINION THAT PAYMENTS MADE TO TSRDS WERE NOT ADMISSIBLE AS SAME WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE,THAT THE EXPEND ITURE INCURRED ON VARIOUS ACTIVITIES LIKE VILLAGE LINK ROAD, DRINKING WATER PROJECT, IRRIGATION FACIL ITIES, VOCATIONAL TRAINING ETC.HAD NO NEXUS WITH THE BUSINESS CARRIED ON BY THE ASSESSEE. 6.1. AGAINST THE ORDER OF THE AO.S,ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,HE HELD THAT THE A SSESSEE HAD GIVEN CONTRIBUTIONS TO TSRDS THAT WAS AN INDEPENDENT ENTITY REGISTERED UNDER THE SOCI ETIES ACT,THAT THE EXPENDITURE INCURRED BY THE IT HAD NO DIRECT NEXUS WITH THE BUSINESS CARRIED ON BY IT,THAT THE ASSESSEE WAS ENGAGED IN THE 8 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. BUSINESS OF MANUFACTURE OF STEEL AND THE EXPENDITUR E WAS INCURRED FOR THE ACTIVITIES WHICH HAD NO DIRECT NEXUS WITH THE BUSINESS CARRIED ON BY IT.REL YING UPON THE JUDGMENTS OF THE JURISDICTIONAL HIGH COURT IN STANDARD MILLS CO. LTD.(209ITR85) AND VOLTAS LTD.(207ITR47),HE HELD THAT THE EXPENDITU -RE INCURRED BY IT HAD NO NEXUS WITH THE BUSINESS CARRIED ON BY IT,THAT IT WAS AN APPLICATION OF INCOME FOR A CHARITABLE OR PHILANTHR OPIC CAUSE,THAT THERE WAS NO COMMERCIAL EXPEDIENCY ALSO IN INCURRING THE EXPENDITURE ON THE RURAL DEVELOPMENT,THAT THE DISALLOWANCE MADE BY THE AO DID NOT CALL FOR ANY INTERFERENCE. 6.2. BEFORE US,AR SUBMITTED THAT ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL FOR THE EARLIER AY.S. I.E. 1987-88,1989-09 AND 1990 -91(SUPRA).DR SUPPORTED THE ORDER OF THE FAA. WE FIND THAT ISSUE BEFORE US,HAS BEEN DECIDED BY TH E TRIBUNAL,WHILE ADJUDICATING THE APPEALS FOR AY.1987-88,1989-09 AND 1990-91(SUPRA) IN THE FOLLOW ING MANNER: 13.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT DEALING WITH THE ISSUE OF CONTRIBUTION TO VARIOUS I NSTITUTIONS BY THE ASSESSEE ,THE TRIBUNAL HAS DECIDED THE MATTE; IN THE ORDER FOR THE AY.1985-86; AS UNDER: 40. GROUND NO. 14 OF THE ASSESSEE READS AS FOLLOWS : THE LEARNED CIT(A) ERRED IN DISALLOWING CONTRIBUTI ONS TO INSTITUTIONS ON THE GROUND THAT SUCH EXPENDITURE WAS NOT INCURRED FOR THE PURPOSES OF TH E BUSINESS, HAVING FAILED TO UNDERSTAND THE SCENARIO THAT ESTABLISHES NEXUS BETWEEN THE CONTRIB UTIONS MADE AND THE BUSINESS OF THE APPELLANT. 41.THE ASSESSING OFFICER DISALLOWED CONTRIBUTIONS A GGREGATING TO RS.11,31,700 TO THE FOLLOWING INSTITUTIONS ENGAGED IN VARIOUS ACTIVITIES IN THE M ED OF SPORTS, EDUCATION AND CULTURAL PROMOTIONS ON THE GROUND THAT THE CONTRIBUTION WERE MADE FOR T HE PURPOSE OF LABOUR WELFARE AND THAT THE THE PROVISIONS OF SECTION 40A(9) ARE ATTRACTED. X X X THE ASSESSING OFFICER FURTHER HELD THAT ALTERNATIVE LY THE CONTRIBUTIONS ARE LIABLE FOR DISALLOWANCE AS BEING IN THE NATURE OF CHARITY.THE BACKGROUND UN DER WHICH THESE EXPENSES HAS TO BE INCURRED BY THE ASSESSEE IS AS FOLLOWS: 42.THE ASSESSEE HAD SET UP ITS WORKS IN 1907 IN THE VIRGIN FOREST AREAS OF THE SINGHBHUM-DISTRICT, HAD TO DEVELOP THE TOWNSHIP OVER A PERIOD OF YEARS ON LAND OF ABOUT 25 SQ. KM. LEASED TO IT ON A LONG TERM BASIS BY THE GOVERNMENT OF BIHAR. AS ALL THE FACILITIES OF THE WORKS, SITES FOR THE ASSOCIATE COMPANIES, RESIDENCE SITES FOR ITS OWN EM PLOYEES AND THEIR DEPENDENTS AND SITES FOR THE BUSINESS COMMUNITY WERE TO BE LOCATED ON ITS OWN LA ND, THE ASSESSEE HAD TO PROVIDE ALL THE FACILITIES OF A MUNICIPALITYLIKE,POWER,WATER,SANITA TION,HOSPITALS, PLAYGROUNDS, CLUBS, READING ROOMS, DISPENSARIES, COMMUNITY WELFARE CENTRES, CUL TURAL ASSISTANCE, ETC. IN THE LEASE AGREEMENT FINALISED WITH THE BIHAR GOVERNMENT THE ASSESSEE WA S UNDER AN OBLIGATION TO PROVIDE AJI THE CIVIC AMENITIES IN JAMSHEDPUR AND, THEREFORE, THE ASSESSE E HAD TO CONTINUE THESE OBLIGATIONS WHICH IT HAD UNDERTAKEN EARLIER ON ITS OWN, IN THE ABSENCE OF A MUNICIPALITY IN A LARGE TOWNSHIP LIKE STEEL CITY OF JAMSHEDPUR. WITH THE INCREASE IN THE NUMBER OF P EOPLE RESIDING IN JAMSHEDPUR, THE ASSESSEE FOUND IT DIFFICULT TO COPE WITH ALL THE SERVICES OF CIVIC AMENITIES AND IT HAS, THEREFORE, ENCOURAGED SENIOR OFFICERS OF THE COMPANY AND OTHER LEADING CI TIZENS IN JAMSHEDPUR TO SET UP VOLUNTARY ORGANISATIONS REGISTERED UNDER THE SOCIETIES ACT OR OTHER CHARITABLE INSTITUTIONS TO UNDERTAKE ACTIVITIES IN THE FIELD OF SPORTS, EDUCATION, MEDIC AL RELIEF, CULTURAL PROMOTIONS, ETC.THE ASSESSEE FROM TIME TO TIME MADE CONTRIBUTIONS TOWARDS EXPENS ES OF SUCH INSTITUTIONS TO THE EXTENT THEY PROVIDE THE SERVICE TO THE PEOPLE OF JAMSHEAPUR, TH E BURDEN TO PROVIDE SIMILAR CIVIC AMENITIES BY THE ASSESSEE IS REDUCED THE ASSESSEE HAD MADE CONTR IBUTIONS OF RS 11,31,700 TO THE INSTITUTIONS MENTIONED ABOVE DURING THE ACCOUNTING YEAR 1984-85 TO ACHIEVE THIS OBJECTIVETHE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM THAT THESE C ONTRIBUTIONS WERE MADE TO DISCHARGE ITS OBLIGATIONS TOWARDS CIVIC AMENITIES AND, THEREFORE, IT WAS AN ITEM OF BUSINESS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN THE ORDINARY COURSE OF BU SINESS. HE HELD THAT SINCE THE MAJOR BENEFICIARIES OF THE EXPENDITURE WERE THE COMPANYS EMPLOYEES, IT WAS AN ITEM OF LABOUR WELFARE EXPENDITURE. 43.ON APPEAL BY THE ASSESSEE, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN A.Y.1968-69ON AN ID ENTICAL ISSUE, THE ITAT, MUMBAL IN I.T.A. NO.2068/BOM/74-75 WAS PLEASED TO HOLD THAT EXPENDIT URE WAS FOR WELFARE OF EMPLOYEES AND WAS, THEREFORE, ALLOWABLE AS DEDUCTION. IT WAS THE CONTE NTION OF THE LEARNED DR BEFORE US THAT IN THE 9 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. EARLIER DECISIONS OF THE TRIBUNAL, THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VOLTAS LTD. VS. CIT, 207 ITR 47 (BOM) HAS NOT BEEN CONSIDERED. IN THE CASE OF VOLTAS LTD. (SUPRA), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THERE W AS NO NEXUS BETWEEN EXPENSES AND BUSINESS OF THE ASSESSEE.IN THE AFORESAID DECISION THE HONBLE COURT LAID EMPHASIS ON BUSINESS EXPEDIENCY IN MAKING A PAYMENT. ON FACTS THE COURT FOUND NO BUSINESS EXPEDIENCY IN MAKING THE PAYMENT.IN THE CASE OF THE ASSESSEE WE ARE OF THE V IEW THAT THE PAYMENTS WERE MADE KEEPING IN MIND BUSINESS EXPEDIENCY VIZ.,TO HAVE A MOTIVATED W ORK FORCE.IN THE LIGHT OF THE PECULIAR FACTS IN ASSESSEES CASE,THE EXPENDITURE IN QUESTION HAS TO BE ALLOWED AS A DEDUCTION U/S. 37(1).THE PROVISIONS OF SECTION 40A(9) IN OUR VIEW WOULD NOT APPLY BECAUSE THE PAYMENTS IN QUESTION WERE NOT MADE BY THE ASSESSEE IN HIS CAPACITY AS AN EMPL OYER. WE, THEREFORE, DIRECT THAT THE DEDUCTION AS CLAIMED BY THE ASSESSEE BE ALLOWED, GROUND NO. 14 I S ALLOWED. WE HAVE PERUSED THE MOU SIGNED BY THE ASSESSEE WITH THE WORKERS UNION.CONSIDERING THE TERMS AND CONDITIONS OF THE MOU WE ARE OF THE OPINION THA T ORDERS OF THE TRIBUNAL DELIVERED IN THE CASE OF THE ASSESSEE AS WELL AS TELCO SHOULD BE FOLLOWED .IN OUR VIEWS,MOU MAKES THE FACTS AND CIRCUMSTANCES OF THE CASE PECULIAR. WE FIND THAT HO NBLE JURISDICTIONAL HIGH COURT HAS,IN ITS ORDER DATED 26.12.2012, DISMISSED THE APPEAL FILED BY THE DEPARTMENT FILED FOR AY.1985-86(IT APPEAL NO.3176 OF 2010) WHERE SIMILAR ISSUE OF CONTRIBUTIO N TO VARIOUS INSTITUTIONS WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL.(GROUND NO.B AND F) .AS FAR AS DISCHARGING OF SOCIAL RESPONSIBILITY IS CONCERNED VOLTAS LTD.HAD TO BE CONSIDERED THE GU IDING CASE.AS IN THAT CASE THERE WAS NO MOU WITH THE WORKERS, SO, CONSIDERING THE PECULIARITY O F FACTS OF THE CASE,AS AGAINST THE MATTER OF VOLTAS,WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSE E. FOLLOWING THE ORDER FOR THE AY.1986-87 WE DECIDE TH E ISSUE OF PAYMENTS TO TSRDC IN FAVOUR OF THE ASSESSEE FOR ALL THE THREE AY.S CONSIDERING THE ORDERS FOR THE EARLIER YEARS(SUPRA) ,ISSUE OF PAYMENT TO TSRDC IS DECIDED IN FAVOUR OF THE ASSESSEE FOR ALL THE THREE YEARS. AS THE FACTS OF THE YEAR UNDER APPEAL AND THE EARLI ER IDENTICAL AND BASIS FOR DISALLOWANCE BY THE AO AND THE FAA ARE SAME,SO,FOLLOWING THE ORDERS FOR THE EARLIER YEARS,WE ALLOW THE APPEAL FILED BY THE ASSESSEE WITH REGARD TO CONTRIBUTION MADE TO TSRDS. 7. CONTRIBUTION TO TATA SPORTS CLUB(TSC)OF RS.6,53,47 1/- IS THE SUBJECT MATTER OF NEXT GROUND OF APPEAL FILED BY THE ASSESSEE.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD PAID RS.6.53 LAKHS TO TSC.AO HELD THAT THE CONTRIBU TION TO THE CLUB CAME WITHIN THE PREVIEW OF SECTION 40A(9) AND WAS DISALLOWABLE.FAA HELD,WHILE DECIDING THE APPEAL FILED BY THEASSESSEE,THAT HER PREDECESSORS HAD DISALLOWED THE EXPENDITURE IN EARLIER YEARS,THAT SAME HAS TO BE DISALLOWED. 7.1. BEFORE US,AR AND DR AGREED THAT IN THE EARLIER AY.S .,TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE.IN THE ORDER FOR THE AY.S. 1990-91, 1994-95 AND 1995-96(SUPRA) ALLOWABILITY OF CONTRIBUTION TO TSC WAS DECIDED AS UNDER: 7. NEXT COMMON GROUND OF APPEAL DEALS WITH CONTRIBUTIO NS TO TATA SPORTS BOARD(G.10-1991-92,G. 6-1994-95,G.5-1995-96) AND THE AMOUNTS INVOLVED ARE RS.2.50LAKHS,RS.3.88 LAKHS AND RS.3.50 LAKHS RESPECTIVELY.DURING THE ASSESSMENT PROCEEDING S AO.S HELD THAT THE CONTRIBUTIONS WERE NOT ADMISSIBLE AS DEDUCTION U/S.37(1) OF THE ACT, AS TH E EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 7.1. IN THE APPELLANT PROCEEDINGS,FAA CONSIDERED THE SUB MISSIONS OF THE ASSESSEE AND HELD THAT THE CONTRIBUTIONS WERE COVERED BY SECTION 40A(9) OF THE ACT,THAT SECTION 40A(9) WAS ENACTED WITH A VIEW TO DISCOURAGING CREATION OF CERTAIN IRREVOCABL E TRUSTS OSTENSIBLY FOR THE WELFARE OF THE EMPLOYEES AND TRANSFER TO SUCH TRUST SUBSTANTIAL AM OUNTS BY WAY OF CONTRIBUTION,THAT WITH A VIEW TO DISCOURAGING CREATION OF SUCH TRUSTS, FUNDS, COMPAN IES, ASSOCIATION OF PERSONS, SOCIETIES ETC.,THE FINANCE ACT, 1984 HAD PROVIDED THAT NO DEDUCTION WO ULD BE ALLOWED IN THE COMPUTATION OF TAXABLE PROFITS IN RESPECT OF ANY SUMS PAID BY THE ASSESSEE AS AN EMPLOYER TOWARDS THE SETTING UP OR FORMATION OF OR A CONTRIBUTION TO ANY FUND, TRUST, COMPANY, ASSOCIATION OF PERSONS, BODY OF INDIVIDUALS OR SOCIETY OR ANY OTHER INSTITUTION FOR ANY PURPOSE EXCEPT WHERE SUCH SUM WAS PAID OR CONTRIBUTED TO A RECOGNISED PROVIDENT FUND OR AN AP PROVED GRATUITY FUND OR APPROVED SUPERANNUATION FUND OR FOR THE PURPOSES OF AND TO T HE EXTENT REQUIRED BY OR UNDER ANY OTHER LAW,THAT THE CONTRIBUTIONS WERE GIVEN TO TATA SPORT S CLUB IN THE CAPACITY OF AN EMPLOYER FOR THE 10 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. BENEFIT OF THE EMPLOYEES AS WELL AS OTHERS,THAT THE ANNUAL CONTRIBUTION TO STEEL PLANTS SPORTS BOARD WAS AN INDEPENDENT ORGANISATION MANAGING THE AFFAIR S OF THE BOARD WITH ITS OWN BUDGET, THAT THE PURPOSE OF CREATION OF THE ASSOCIATION WAS TO CREAT E AND TRAIN ATHLETES OF NATIONAL STANDARD,THAT THE OBJECTIVE HAD NO RELEVANCE IN CARRYING ON THE BUSIN ESS OF THE ASSESSEE,THAT THE CONTRIBUTION MADE BY THE IT WAS AN APPLICATION OF INCOME.FINALLY,HE C ONFIRMED THE DISALLOWANCE MADE BY THE AO.BEFORE US,AR SUBMITTED THAT SIMILAR ISSUE WAS DE CIDED IN FAVOUR OF THE ASSESSEE ,BY THE TRIBUNAL,IN THE APPEAL FOR THE EARLIER THREE ASSESS MENT YEARS I.E.1987-88,1989-90 AND 1990-91.DR ALSO CONSENTED THAT THE ISSUE IS DECIDED BY THE TRI BUNAL FOR EARLIER YEARS.WE FIND THAT IN THE EARLIER YEARS ORDER(SUPRA),ISSUE IS DECIDED AS UNDER: 12.2. WE FIND THAT,FOLLOWING THE ORDER FOR ALLOWING EXPEN DITURE TO TSRDC,TRIBUNAL HAD DECIDED THE ISSUE OF PAYMENT TO STEEL PLANTSSPORT BOARD AN D TATA SPORTS BOARD IN FAVOUR OF ASSESSEE, WHILE ADJUDICATING APPEAL FOR THE YEAR 1986-87.FOLL OWING THE ORDERS FOR THE EARLIER AY,WE DECIDE THE GROUND NO.G.12 AND G.11FOR THE AY.1987-88 AND A Y.1990-91 IN FAVOUR OF THE ASSESSEE FOLLOWING THE SAME WE DECIDE GROUND NO.10,GROUND NO .6-AND GROUND NO.5FOR AY.S.1991-92, 1994-95 AND 1995-96 IN FAVOUR OF THE ASSESSEE. AS THE ISSUE IS ALREADY COVERED IN FAVOUR OF THE AS SESSEE-COMPANY IN EARLIER YEARS,SO,THERE IS NO REASON NOT TO DECIDE IT IN FAVOUR OF THE ASSESSEE F OR THIS YEAR.GROUND NO.9 STANDS ALLOWED. 8. TENTH GROUND OF APPEAL IS ABOUT CONTRIBUTIONS OF RS .1,37,96,407/- MADE BY THE ASSESSEE TO THE VARIOUS INSTITUTIONS OF JAMSHEDPUR.AO FOUND THAT DURING THE YEAR THE ASSESSEE HAD MADE CONTRIBU -TION TO MANY AN INSTITUTIONS OF JAMSHEDPUR AMOUNTI NG TO RS.1.37 CRORES.AO WAS OF THE OPINION THAT EXPENDITURE WAS NOT WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE COMPANY AND THAT WAS IN NATURE OF DONATION, THAT SAME WAS NOT ALLOWABLE U/S .37(1)OF THE ACT. 8.1. IN THE APPELLATE PROCEEDINGS FAA HELD THAT EXPENDIT URE WAS NOT INCURRED BY THE ASSESSEE FOR ITS BUSINESS, THAT NO BUSINESS INTEREST WAS SERVED BY MAKING THESE CONTRIBUTIONS,THAT EXPENDITURE INCURRED BY THE ASSESSEE WAS ALSO NOT COVERED BY TH E PROVISIONS OF SECTION 35 OF THE ACT. 8.2. BEFORE US,AR ARGUED THAT ISSUE IS COVERED BY THE OR DER OF THE TRIBUNAL FOR EARLIER YEARS.WE FIND THAT THE ISSUE OF CONTRIBUTION TO JAMSHEDPUR I NSTITUTIONS HAS BEEN DECIDED BY US IN THE EARLIER YEARS IN FAVOUR OF THE ASSESSEE.WE WOULD LIKE TO RE PRODUCE OUR ORDERS OF THE EARLIER YEARS.IT READS AS UNDER : 8. CONTRIBUTIONS TO VARIOUS INSTITUTIONS AT JAMSHEDPUR IS SUBJECT MATTER OF GROUND NO.11 FOR AY. 1991-92,GROUND NO.7FOR AY.1994-95 AND GROUND NO.6 F OR AY.1995-96.DURING THE ASSESSMENT PROCEEDINGS AO.SHAD MADE DISALLOWANCE OF RS.25.54 L AKHS,RS.85LAKHS.AND RS.1.79 CRORES RESPECTI-VELY FOR THE YEARS UNDER APPEAL.ASSESSEE C ONTENDED THAT THE SAID CONTRIBUTIONS WERE MADE TO VARIOUS INSTITUTIONS FOR DISCHARGING ITS CIVIC, SOCIAL OBLIGATIONS TO MAINTAIN THE TOWNSHIP OF JAMSHEDPUR. AO.S DID NOT ACCEPT THE CONTENTION OF T HE ASSESSEE AND HELD THAT THE CONTRIBUTIONS WERE GIVEN FOR THE WELFARE OF THE EMPLOYEES AND SUC H CONTRIBUTIONS WHICH WERE GIVEN TO THEM WERE HIT BY THE PROVISIONS OF SECTION 40A(9) BECAUSE THE PAYMENTS WERE MADE IN THE CAPACITY OF AN EMPLOYER,THAT IF IT WAS TAKEN THAT THE INSTITUTIONS TO WHOM CONTRIBUTIONS WERE GIVEN WERE PROVIDING CIVIC AMENITIES TO THE CITY OF JAMSHEDPUR THEN ALSO THE CONTRIBUTIONS WOULD BE LIABLE FOR DISALLOWANCE BECAUSE THE EMPLOYEES WERE MAJOR BENEF ICIARIES OF THE CONTRIBUTIONS,THAT IF THE BENEFIT OF THE CONTRI -BUTIONS WAS FOR THE CITY OF JAMSHEDPUR AT LARGE THEN THESE CONTRIBUTION WERE IN THE NATURE OF CHARITY.THEY DISALLOWED THE CLAIM MADE BY THE ASSESSEE. 8.1. DECIDING THE APPEAL FILED BY THE ASSESSEE,FAA HELD THAT THAT SIGNIFICANT CONTRIBUTIONS MADE BY THE WERE TO JAMSHEDPUR NOTIFIED AREA COMMITTEE,MERR Y HOSPITAL,JAMSHEDPUR,TRADE WORKERS UNION,LOYOLA SCHOOL,ALL INDIA FOOTBALL ASSOCIATION, THAT ON A PERUSAL OF THE ABOVE CONTRIBUTIONS IT WAS EVIDENT THAT THE ASSESSEE HAD GIVEN A GENERAL A ND VAGUE EXPLANATION ABOUT THE ISSUE BEFORE HIM,THAT IT DID NOT ESTABLISH THE DIRECT NEXUS BETW EEN THE CONTRIBUTIONS AND THE BUSINESS,THAT IN THE ABSENCE OF SUCH A NEXUS, IT COULD NOT BE PRESUMED T HAT THE CONTRIBUTIONS WERE MADE FOR THE PURPOSE OF THE BUSINESS, THAT THE CONTRIBUTIONS MAD E BY THE ASSESSEE WERE ON THE NATURE OF APPLICATION OF INCOME,THAT THE CONTRIBUTIONS WERE H IT BY THE PROVISIONS OF SECTION 40A (9) OF THE ACT.FAA UPHELD THE ORDER OF THE AO.S.BEFORE US,AR A RGUED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE-COMPANY BY THE ORDERS OF THE EARLIER YEARS -AY.S.1987-88,1989-09 AND 1990-91(SUPRA). 11 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. 13.2. BEFORE US,AR AND DR TOOK THE SAME STAND THAT THEY H AD TAKEN FOR THE EARLIER TWO GROUNDS OF APPEAL.WE HAVE DECIDED GROUNDS NO.11-12 IN FAVOUR O F THE ASSESSEE.FOLLOWING THE SAME GROUND NO.13 IS ALSO ALLOWED, AS THE FACTS OF THE GROUND A RE IDENTICAL TO EARLIER GROUNDS. FOLLOWING THE ABOVE,WE DECIDE THE ISSUE OF PAYMENT OF CONTRIBUTIONS TO VARIOUS INSTITUTIONS AT JAMSHEDPUR IN FAVOUR OF THE ASSESSEE FOR ALL THE TH REE AY.S. IN VIEW OF THE ABOVE DISCUSSION,GROUND OF APPEAL NO .10 IS DECIDED IN FAVOUR OF THE ASSESSEE. 9. NEXT ISSUE IS ABOUT CONTRIBUTION MADE TO INSTITUTE FOR MINERS & METAL WORKERSEDUCATION (IMMWE)OF RS.7,50,000/-.DISALLOWING THE EXPENDITURE INCURRED BY THE ASSESSEE,AO HELD THAT IT WAS NOT PROVED CONCLUSIVELY THAT THE EXPENDITURE WA S WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS.IN THE APPELLATE PROCEEDINGS,FAA HELD THAT THE PAYMENT BY THE ASSESSEE WAS NOT TOWARDS ANY EXPENDITURE BUT SAME WAS BY WAY OF CONTRIBUTION ,THAT ASSESSEE DID NOT AVAIL ANY SERVICES IN LIEU OF THE PAYMENT DURING THE YEAR,THAT THERE WAS NO DIRECT NEXUS BETWEEN THE EXPENDITURE INCURRED AND THE BENEFITS DERIVED BY THE ASSESSEE,T HAT PAYMENT WAS IN THE NATURE OF CONTRIBUTION OR DONATION AND WAS NOT ALLOWABLE AS BUSINESS EXPENDIT URE. 9.1. DURING THE COURSE OF HEARING BEFORE US,AR STATED TH AT SIMILAR ISSUE HAD ARISEN IN THE EARLIER YEARS ALSO.DR SUPPORTED THE ORDER OF THE FAA.WE FIN D THAT ISSUE OF PAYMENT TO INSTITUTE FOR MINERS & METAL WORKERS EDUCATION HAD ARISEN FOR THE FIRST TIME IN THE YEARS 1994-95 AND 1995- 96.VIDE OUR ORDER DATED(SUPRA),WE HAD DISMISSED THE APPEAL OF THE ASSESSEE AS DETAILS OF PAYMENT WERE NOT FILED BY IT BEFORE THE AO.IT HAD PRODUCED ADDITIONAL EVIDENCE BEFORE THE FAA FOR THE FIRST TIME,SO,HE DIRECTED THE AO TO ALLOW THE EXPEN DITURE AFTER VERIFYING THE CLAIM MADE BY THE ASSESSEE.WE HAVE HELD THAT THE FAA HAD FOLLOWED THE PROVISIONS OF RULE 46 A OF THE IT RULES,1962 AND THEREFORE NO INTERFERENCE WAS CALLED FOR FROM OUR SIDE IN THIS REGARD.IN THE EARLIER YEAR SIMILAR KIND OF EXPENDITURE WAS ALLOWED BY THE TRIBUNAL FOR THE PAYMENTS MADE TO XLIR,RANCHI AND IIT KHARGARPUR.WE ARE PARTY TO SUCH ORDERS.THEREFORE,FOLLOWING THE ORDER FOR THE YEARS;1985-86,1986-87,1987-88,1989-90,1990-91; WHERE CONTRIBUTION TO SIMILAR INSTITUTIONS HAVE BEEN ALLOWED,WE DECIDE GROUND NO.11 IN FAVOUR OF THE ASSESSEE. 10. LIABILITY UNDER EMPLOYEE SEPARATION SCHEMES(RS. 2,9 0,70,50,553/-)INITIATED DURING THE YEAR IS THE NEXT GROUND OF APPEAL.BEFORE US,AR SUBMITTED AS UNDER : SINCE THE DEDUCTION IN RESPECT OF PENSION TO EMPLO YEES IS BEING ALLOWED ON PAYMENT BASIS IN SUBSEQUENT ASSESSMENT YEARS,THIS GROUND OF APPEAL I S OTIOSE WITH THE PASSAGE OF TIME CONSIDERING THE ABOVE GROUND NO.12 IS DIS MISSED TREATING IT AS INFRUCTUOUS. 11. LAST GROUND OF APPEAL FILED BY THE ASSESSEE-COMPANY IS ABOUT DISALLOWANCE MADE ON ACCOUNT OF DELAYED CONTRIBUTION TO APPROVED SUPERANNUATION FUND,AMOUNTING TO RS.62,27,508/-.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE H AD DEPOSITED THE PF CONTRIBUTION IN THE MONTH OF APRIL AND MAY 1996,WHEREAS SAME WAS TO BE DEPOSITED ON 1 ST APRIL,1996.INVOKING THE PROVISIONS OF SECTION 43(B)(B)OF THE ACT,HE DISALLO WED THE EXPENDITURE AMOUNTING TO RS.62.27 LAKHS.IN THE APPELLATE PROCEEDINGS FAA CONFIRMED TH E ORDER OF THE AO. BEFORE US,AR ARGUED THAT ISSUE OF DEPOSIT OF EMPLOY ERS CONTRIBUTION OF PF ON A PARTICULAR DATE HAS BEEN FINALLY DECIDED BY THE HONBLE APEX COURT IN THE MATTER OF ALOM EXTRUSION(319ITR306).DR LEFT THE ISSUE TO BE DECIDE D ON MERITS. WE HAVE PERUSED THE MATERIAL ON RECORD.WE FIND THAT IN THE CASE OF ALOM EXTRUSION(SUPRA)HONBLE SUPREME COURT HAS HELD AS U NDER : THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TAX ACT, 1961, BY THE FINANCE ACT,2003,OPERATED, RETROSPECTIVELY, WITH EFFECT FRO M APRIL 1,1988 AND NOT PROSPECTIVELY FROM APRIL 1, 2004. EARLIER UNDER THE SECOND PROVISO TO SECTION 43B AS AMENDED BY THE FINANCE ACT, 1989, ASSESSEES WERE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STOOD CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PROVIDENT FUNDS ACT.THIS CREATED FURTHER DIFFIC ULTIES AND ON A REPRESENTATION MADE TO THE 12 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. FINANCE MINISTRY ONE MORE AMENDMENT WAS MADE BY THE FINANCE ACT, 2003. THOUGH THIS AMENDMENT WAS MADE APPLICABLE WITH EFFECT FROM APRI L 1, 2004, THE AMENDMENT WAS CURATIVE IN NATURE AND APPLIED RETROSPECTIVELY WITH EFFECT FROM APRIL 1, 1988. WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY U NINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBV IOUS OMISSION THEREIN IS REQUIRED TO BE READ RETROSPECTIVELY IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. AS PER THE AMENDED SECTION IF EMPLOYERS CONTRIBUTI ON IS DEPOSITED IN THE FUNDS BEFORE THE DUE DATE OF FILING OF RETURN,AS ENVISAGED BY THE PROVIS IONS OF SECTION 139(1)OF THE ACT,IT HAS TO BE ALLOWED.IN THE CASE UNDER CONSIDERATION AMOUNT WAS DEPOSITED IN THE MONTHS OF APRIL AND MAY OF 1996 WHEREAS DUE DATE OF FILING OF RETURN WAS 30.11 .1996.ASSESSEE HAD FILED ITS RETURN OF INCOME 29.11. 1996.CONSIDERING THE FACT THAT CONTRIBUTION TO THE FUND WAS MADE BEFORE THE DUE DATE OF FILING OF RETURN,WE ALLOW THE GROUND FILED BY THE A SSESSEE-COMPANY. AS A RESULT,APPEAL FILED BY THE ASSESSEE FOR THE YE AR UNDER APPEAL IS ALLOWED IN PART, ITA/4371/M/2005: 12. SOLITARY GROUND OF APPEAL FILED BY THE AO IS ABOUT DISALLOWANCE DELETED BY THE FAA IN RESPECT OF EXPENDITURE INCURRED FOR RELINING INNER WALLS OF BLAST FURNACE.AO TREATED THE EXPENDITURE AS CAPITAL ON THE GROUND THAT THE RELINING OF THE FURN ACE ENABLES THE FURNACE TO FUNCTION AT LEAST FOR SEVEN YEAR, THAT RELINING GAVE ENDURING BENEFIT TO THE ASSESSEE. 12.1. IN THE APPELLATE PROCEEDINGS BEFORE THE FAA IT WAS ARGUED THAT IN A BLAST FURNACE IRON ORE WAS POURED ALONG WITH LIME AND COKE AND HEATED AT HIGH TEMPERATURE TO PRODUCE IRON IN MOLTEN FORM,THAT THE BLAST FURNACES WERE MADE OF STEEL WAL LS WHICH COULD MELT AT HIGH TEMPERATURES,THAT THE FURNACE INSIDE WOULD BE INSULATED BY REFRACTORY BRICKS,THAT THE RELINING THE WALLS OF THE BLAST FURNACES HAD A SHORT LIFE,THAT THE EXPENDITURE WAS OF REVENUE NATURE.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R,FAA HELD THAT BY INCURRING THE EXPENDITURE THE ASSESSEE HAD NOT ACQUIRED ANY NEW CAPITAL ASSET AND THERE WAS NO ADDITION TO OR EXPANSION OF THE PROFIT MAKING APPARATUS OF THE COMPANY,THE INCU RRING OF EXPENDITURE DID NOT ADD TO THE FIXED CAPITAL OF THE ASSESSEE,THAT IT DID NOT ACQUIRE A S OURCE OF PROFIT OR INCOME,THAT THE EXPENDITURE WAS PRIMARILY RELATED TO THE EFFICIENT FUNCTIONING OF T HE FURNACES AND WAS THEREFORE INCURRED IN THE PROCESS OF CARRYING ON BUSINESS OF MANUFACTURING ST EEL.RELYING UPON THE DECISIONS OF SRI RAMA SUGAR MILLS LTD. (21ITR191),DYERS STONE LIME COMPA NY (P) LTD.(136ITR8),EMPIRE JUTE CO. LTD. (124ITR1),FAA HELD THAT THE EXPENDITURE HAD NO T BROUGHT IN TO EXISTENCE ANY NEW CAPITAL ASSET,THAT THE BENEFIT OBTAINED BY THE ASSESSEE WAS ONLY IN THE REVENUE FIELD FOR EFFICIENTLY CARRYING ON THE BUSINESS OF MANUFACTURING STEEL,THAT THE EXP ENDITURE HAD TO BE TREATED AS REVENUE ONLY,THAT IN ALL THE EARLIER YEARS RELINING EXPENDITURE WAS A LLOWED AS REVENUE EXPENDITURE. 12.2. BEFORE US,AR ARGUED THAT THE ASSESSEE HAD TO CARRY OUT RELINING WORK AT REGULAR INTERAVAL,THAT AO HIMSELF HAD TREATED THE EXPENDITURE ON RELINING AS REVENUE EXPENDITURE IN ALL THE EARLIER AND SUBSEQUENT YEARS,THAT ONLY IN THE YEAR UNDER APPEAL IT WAS TREATED AS CAPITAL EXPENDITURE,THAT ASSESSEE HAD NO ACQUIRED ANY ASSET BY INCURRING SUC H EXPENDITURE,THAT IT WAS IN THE NATURE OF REPAIRING,THAT IT DID NOT RESULT IN ANY ENDURING BE NEFIT.DR STATED THAT ISSUE COULD BE DECIDED ON MERITS. 12.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT EXPENDITURE IN QUESTION WAS INCURRED BY THE ASSESSE E FOR RELINING FURNACES,THAT AO HAD DISALLOWED THE EXPENDITURE FOR THE FIRST TIME TREATING IT AS C APITAL EXPENDITURE.WE ARE AWARE THAT PRINCIPLES OF RES JUDICATA DO NOT APPLY IN INCOME TAX PROCEEDINGS .BUT,RULE OF CONSISTENCY DEMANDS THAT IF SAME FACTS AND CIRCUMSTANCES EXIT THEN WITHOUT BRINGING DISTINGUISHING FEATURES OF A TRANSACTION, STAND TAKEN EARLIER SHOULD NOT BE DISTURBED.WE FIND THAT AO HAS NOT DISCUSSED AS HOW THE FACTS FOR THE YEAR WERE DIFFERENT FROM THE EARLIER YEAR WITH REGA RD TO THE RELINING OF THE FURNACES.THE NATURE OF JOB DONE BY THE ASSESSEE DID NOT BRING IN TO EXISTE NCE ANY NEW ASSET AND IT WAS NOT CAPABLE OF BRINGING ANY ENDURING BENEFIT TO THE ASSESSEE.RELIN ING WAS AN EXPENDITURE OF REVENUE NATURE. 13 ITA NOS. 4118 TO 4371/MUM/2005 THE TATA IRON & STEE L CO. LTD. THEREFORE, UPHOLDING THE ORDER OF THE FAA,WE DECIDE THE GROUND NO.1 AGAINST THE AO. AS A RESULT,APPEAL FIELD BY THE ASSESSEE STAND PART LY ALLOWED & APPEAL OF THE AO STAND DISMISSED. , - #% . / ' + ! - 0 ' 12 3 #% ( ' # 0 ' 12 . ORDER PRONOUNCED IN THE OP EN COURT ON 13 TH MAY,2014 . ! ' )*$ 4 5# 13 EBZ EBZEBZ EBZ ,201 4 * ' + 6 SD/- SD/- ( !' / AMIT SHUKLA) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 5# /DATE: 13.05.2014. SK ! ! ! ! ' '' ' 7 8 7 8 7 8 7 8 98$ 98$ 98$ 98$ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / :; 2. RESPONDENT / 7<:; 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR G BENCH, ITAT, MUMBAI / 8?+ 7 # TH THTH TH , . . . 6. GUARD FILE/ + , <8 <8 <8 <8 7 7 7 7 //TRUE COPY// !# / BY ORDER, @ / 1 DY./ASST. REGISTRAR , /ITAT, MUMBAI