ACIT, CHENNAI V. M/s. Chennai Petroleum Corporation Ltd., CHENNAI

ITA 439/CHNY/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7760 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI IRS
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT, AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.439/MDS/2009 (ASSESSMENT YEAR: 2005-06) ASSISTANT COMMISSIONER OF INCOME TAX, LARGE TAX PAYER UNIT, 1775, J.N.INNER RING ROAD, ANNA NAGAR WESTERN EXTENSION, CHENNAI-600 101. VS. M/S. CHENNAI PETROLEUM CORPORATION LTD., REFINERY HOUSE, MANALI, CHENNAI-600 068. PAN:AAACM4392C (APPELLANT) (RESPONDENT) APPELLANT BY : MR. ANIRUDH RAI, IRS, CIT DR RESPONDENT BY : MR.R.VIJ AYARAGHAVAN, ADVOCATE DATE OF HEARING : 25 TH JULY, 2012 DATE OF PRONOUNCEMENT : 25 TH JULY 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGNI NG THE ORDER OF THE CIT(A) LTU, CHENNAI DATED 21.11.20 08. THE ONLY GROUND AGITATED BY THE REVENUE IN THE PRESENT APPEAL IS DELETING THE DISALLOWANCE OF SOCIAL AND COMMUNITY W ELFARE EXPENSES BY THE CIT(A). 2. THE ISSUE REGARDING EXPENDITURE INCURRED IN SOCI AL AND COMMUNITY WELFARE BY THE ASSESSEE HAS CROPPED UP TI ME AND AGAIN. FOR THE ASSESSMENT YEAR 1997-98, SIMILAR IS SUE HAD ITA NO. 439/MD S/2009 2 COME UP BEFORE THE TRIBUNAL IN THE ASSESSEES OWN C ASE IN ITA NO.80/MDS/2001. THE CO-ORDINATE BENCH OF THE TR IBUNAL FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. MADRAS REFINERIES LTD. IN ITA NO.578/MDS/1996 AND 22/MDS/1997 DATED 19.03.2010 DECIDED THE ISSUE IN F AVOUR OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENU E VIDE ORDER DATED 21.04.2010. THE CO-ORDINATE BENCH OF TH E TRIBUNAL IN MADRAS REFINERIES LTD.(SUPRA) HAS HELD AS UNDER:- MOREOVER, THE EXPENDITURE WAS INCURRED BY THE ASSESSEE FOR THE WELFARE OF THE NEIGHBOURHOOD RESIDENTS, WHO ARE ADVERSELY AFFECTED BY THE ACTIVITIES OF THE ASSESSEE, BECAUSE THE REFINERY INDUSTRY IS UNDISPUTEDLY A POLLUTING INDUSTRY AND ALSO TO AVOID PROTEST AND AGITATION BY NEIGHBOURHOOD RESIDENTS AND OTHER ACTIVISTS SO THAT THE FUNCTIONING OF THE BUSINESS CONTINUES SMOOTHLY AND UNINTERRUPTEDLY. THUS, THE EXPENDITURE INCURRED ON THE WELFARE OF THE NEIGHBOURHOOD RESIDENTS IS ESSENTIAL FOR THE VERY EXISTENCE AND FUNCTIONING OF THE BUSINESS OF THE ASSESSEE AND IS ALLOWED AS BUSINESS EXPENDITURE U/S.37 OF THE INCOME TAX ACT. 3. IN THE INSTANT CASE, A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE ON THE FOLLOWING COUNTS:- ITA NO. 439/MD S/2009 3 S.NO. SOCIAL & COMMUNITY WELFARE EXPENSES AMT. ` (IN LAKHS) 1 EXPENSES IN CONNECTION WITH RURAL HEALTH CENTRE 1 0.40 2 EXPENSES IN CONNECTION WITH MANALI SCHOOL 1.31 3 EXPENSES IN CONNECTION WITH SPORTS DEVELOPMENT 2. 21 4 EXPENSES IN CONNECTION WITH REHABILITATION EXPENS ES 90.30 5 SOCIAL & COMMUNITY WELFARE EXPENSES IN CBR UNIT 5 .66 TOTAL 109.88 4. THE ASSESSEE HAS INCURRED THESE EXPENDITURE FOR SOCIAL CAUSE, DISCHARGING ITS DUTY TOWARDS THE SOCIETY AND ESPECIALLY FOR THOSE WHO HAVE BEEN ADVERSELY AFFECTED BY THE R EFINERY INDUSTRY WHICH IS ONE OF THE MOST POLLUTING INDUSTR IES. IN VIEW OF THE ABOVE, WE, RESPECTFULLY FOLLOW THE DECISI ON OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CA SE AND DISMISS THE APPEAL OF THE REVENUE BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 25 TH DAY OF JULY, 2012 AT CHENNAI. SD/- SD/- (DR. O.K.NARAYANAN) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 25 TH JULY, 2012. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.