M.P.State Mining Corporation Ltd. Bhopal, Bhopal V. ACIT 2(1), Bhopal

ITA 444/Ind/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8837 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 13-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA; K G GOYAL
• Assessee Lawyers: PIYUSH PARASHAR A RS
• Section: 143(3); 37

Judgement Text

[ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.444/IND/2017 ASSESSMENT YEAR: 2013-14 MP STATE MINING CORPORATION LTD. PARYAWAS BHAWAN BLOCK-1 JAIL ROAD ARERA HILLS BHOPAL / VS. ACIT - 2(1) BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AABCM0300K APPELLANT BY SHRI GAGAN TIWARI & SHRI PIYUSH PARASHAR, A.RS RESPONDENT BY SHRI K.G. GOYAL, SR.D.R. & SMT. ASHIMA GUPTA, D.R. DATE OF HEARING: 18.11.2019 DATE OF PRONOUNCEMENT: 22.11.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE LD. CIT(A)-1BHOPAL DATED 30.3.2017. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER OF THE LD. LOWER AUTHORITIES IS VITIATED ON SEVERAL GR OUNDS, HENCE THE SAME MAY KINDLY BE QUASHED. 2. THAT THE ORDER PASSED IS ILLEGAL, UNLAWFUL AND OPPO SED TO THE PROVISIONS OF LAW. 3. THAT THE LD. A.O. ERRED AND WAS NOT JUSTIFIED IN DI SALLOWING AND THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.1,03,35,000/- ON ACCOUNT OF CSR EXPENSES U/S 37 OF THE INCOME TAX ACT. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, SU BSTITUTE MODIFY ANY OF THE ABOVE GROUNDS ON OR BEFORE THE FI NAL HEARING. 2. THE ONLY EFFECTIVE GROUND IS AGAINST CONFIRMING TH E ADDITION OF RS. 1,03,35,000/- ON ACCOUNT OF CSR EXPE NSES U/S 37 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D AS THE ACT). THE FACTS IN BRIEF ARE THAT CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T U/S 143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 10.2.2016 PERTAINING TO THE ASSESSMENT YEAR 2013-14. WHILE FRAMING THE ASSESSMENT, THE A.O. DISALLOWED CLAI M OF EXPENDITURE INCURRED ON ACCOUNT OF CORPORATE EXPEN SES TO THE TUNE OF RS.1,03,35,000/-. AGGRIEVED AGAINST T HIS [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 3 ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS REJECTED THE AP PEAL OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE A.O. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIE S BELOW ARE NOT JUSTIFIED FOR DISALLOWANCE OF EXPENDITUR E. HE SUBMITTED THAT THE EXPENDITURE WAS INCURRED AT THE BEH EST OF THE STATE GOVERNMENT FOR THE WELFARE OF THE PUBLIC AT LARGE. HE SUBMITTED THAT ASSESSEE IS A GOVERNMENT COMPANY AND UNDER THE IDENTICAL FACTS, THIS TRIBUNAL HAS ALLOWED SUCH EXPENSES. HE FURTHER SUBMITTED THAT THE ASSESSMENT YEAR INVOLVED IS 2013-14. THE AMENDMENT IN THE SECTION 37 OF THE ACT CAME W.E.F. 1.4.2015, HENC E, COULD NOT BE APPLICABLE FOR THE ASSESSMENT YEAR 2013-14. HE FURTHER PLACED RELIANCE ON THE DECISION OF THE TRIBUN AL RENDERED IN THE CASE OF NATIONAL SEED CORPORATION LIMIT ED VS. ADDITIONAL CIT IN ITA NO.6794/DEL/2014 AND THE DECISION RENDERED IN THE CASE OF M/S. KERALA STATE [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 4 INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT IN ITA NO.142/COCH/2017 DATED 7.2.2019. LD. COUNSEL FURTHE R REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. CIT (A). 3. PER CONTRA, LD. D.R. SUBMITTED THAT THERE IS NO AMBIGUITY UNDER THE LAW. THE LAW IS AMPLY CLEAR. DEDUCTION OF EXPENDITURE U/S 37 OF THE ACT IS AVAILAB LE ONLY IN RESPECT OF THOSE EXPENSES WHICH HAVE BEEN WHOLLY AND EXCLUSIVELY INCURRED ON BUSINESS OF THE ASSESSEE. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF EXPENDITURE INCURRED UNDER THE CSR WOULD NOT QUALIFY DEDUCTION AS THE SAME HAS NOT BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE. HE SU BMITTED THAT THIS POSITION OF LAW IS FURTHER CLARIFIED BY WAY OF EXPLANATION TO THE SECTION 37 OF THE ACT, WHICH WAS IN SERTED W.E.F. 1.4.2015 BUT BEING DECLARATORY AND CLARIFICATORY IN NATURE WOULD APPLY RETROSPECTIVELY FROM THE DATE WHEN SECTION 37 OF THE ACT WAS INTRODUCED IN THE STATUTE B OOK. [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 5 HE PLACED RELIANCE ON THIS POSITION FROM THE JUDGEME NT OF THE DELHI HIGH COURT RENDERED IN THE CASE OF PAWAN COMMERCIAL & OTHERS VS. DIRECTORATE OF REVENUE 2007 ( 218) ELT 331 DELHI. LD. D.R. SUBMITTED THAT THE ASSESSEE IS REQUIRED TO DEMONSTRATE THAT THE EXPENDITURE IS EXPEND ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINE SS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTROVERSY IN THIS C ASE IS WITH REGARD TO THE ALLOWABILITY OF THE EXPENDITURE INC URRED UNDER THE CORPORATE SOCIAL RESPONSIBILITY (IN SHORT CSR) SCHEME. THERE IS NO QUARREL WITH REGARD TO THE NATURE OF EXPENDITURE WHETHER IT IS A CAPITAL OR REVENUE. IT IS TO BE DECIDED WHETHER EXPENDITURE INCURRED UNDER THE CSR SCHEME WOULD BE ALLOWABLE AS CLAIMED BY THE ASSESSEE. SIMILAR ISSUE CAME BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NATIONAL SEEDS CORPORATION LTD. VS. [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 6 ADDL. CIT IN ITA NO.6794/DEL/2014 WHEREIN THE TRIBU NAL HAS HELD AS UNDER: [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 7 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 8 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 9 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 10 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 11 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 12 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 13 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 14 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 15 5. FURTHER, RELIANCE IS PLACED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE COORDINATE BENCH REND ERED IN THE CASE OF M/S. KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT IN ITA NO.142/COCHIN/2014. [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 16 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 17 [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 18 6. FROM THE ABOVE, IT IS EVIDENT THAT THE COORDINATE BENCHES HAVE HELD THAT EXPENDITURE INCURRED UNDER THE CSR SCHEME IS ALLOWABLE EXPENDITURE AND THE EXPLANATION [ITA NO.444/IND/2017] [MP STATE MINING CORPORATION LTD., BHOPAL] 19 SO INSERTED IN SECTION 37 OF THE ACT SHALL BE OPERATI VE W.E.F. 1.4.2015. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY OTHER BINDING PRECEDENT. WE, THEREFORE, FOLLOWING THE DECISIONS OF COORDINATE BENCHES RENDERED IN THE CASE OF NATIONAL SEEDS CORPORATION LTD. VS. ADDL. CIT IN ITA NO.6794/DEL/2014 AND IN THE CASE OF M/S. KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT IN ITA NO.142/COCHIN/2014 ALLOW THIS GROUND OF APPEAL AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22. 11.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 22/11/2019 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE