ACIT, Kota V. MANGALAM CEMENT LTD., Kota

ITA 461/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2093 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLLY AGARWAL CIT DHK
• Keywords: Gift; Business expenditure; Earning of tax free income; Corroborative evidences; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A; 37(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 362/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. M/S. MANGALAM CEMENT LTD., ADITYA NAGAR-326520, MORAK, TEHSIL : RAMGANJMANDI, DISTT. KOTA. CUKE VS. THE ACIT, CIRCLE-1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCM 6602 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 461/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. THE ACIT, CIRCLE-1, KOTA. CUKE VS. M/S. MANGALAM CEMENT LTD., ADITYA NAGAR-326520, MORAK, TEHSIL : RAMGANJMANDI, DISTT. KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCM 6602 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. ROLLY AGARWAL (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.08.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13/09/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THESE ARE TWO CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LD. CIT (A), KOTA PERTAINING TO ASSESSMENT YEAR 2013-14. BOTH THESE APPEALS ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. FIRST, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO. 362/JP/2017. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 2 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OUT OF VARIOUS EXPENSES AS UNDER :- EXPENSES DISALLOWED BY THE AO DISALLOWANCE OF EXPENSES CONFIRMED BY CIT (A) PARTICULARS OF EXPENSES AMOUNT CLAIMED % AMOUNT AMOUNT STAFF WELFARE EXPENSES 1,66,88,611/ - 50% 83,44,306/ - 10,00,000/ - CHARGES GENERAL EXPENSES 50,26,923/ - 20% 10,05,385/ - 3,00,000/ - GIFT EXPENSES 16,54,384/ - 50% 8,27,192/ - 8,27,192/ - SALES PROMOTION EXPENSES 3,27,51,934/ - 20% 65,50,387/ - 30,00,000/ - TAXI HIRING EXPENSES 32,61,492/ - 20% 6,52,298/ - 3,26,149/ - 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961 WAS FRAMED VIDE ORDER DATED 22.03.2016. WHILE FRAMING THE ASSESSMENT, THE AO MADE VARIOUS ADDITIONS/DISALLOWANCES TOTALLI NG TO RS. 9,41,02,253/- UNDER VARIOUS HEADS. AGGRIEVED BY THIS ORDER, THE ASSESS EE PREFERRED APPEAL BEFORE LD. CIT (A), WHO CONSIDERING THE SUBMISSIONS OF THE ASSESSE E PARTLY ALLOWED THE APPEAL. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS T RIBUNAL. 3. THE GROUND OF THE ASSESSEES APPEAL IS IN RESPEC T OF DISALLOWANCE OF RS. 10,00,000/- ON ACCOUNT OF STAFF WELFARE EXPENSES, R S. 3,00,000/- ON ACCOUNT OF CHARGES GENERAL EXPENSES, RS. 8,27,192/- ON ACCOUNT OF GIFT EXPENSES, RS. 30,00,000/- ON ACCOUNT OF SALES PROMOTION EXPENSES AND RS. 3,26,149/- ON ACCOUNT OF TAXI HIRING EXPENSES. 3 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. 3.1. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. HE SUBMITTED THAT IN RESPECT O F STAFF WELFARE EXPENSES, THE SIMILAR DISALLOWANCE WAS MADE BY THE ASSESSING OFFI CER IN RESPECT OF THE ASSESSMENT YEARS 2008-09 AND 2010-11. THE TRIBUNAL HAD DELETE D SUCH DISALLOWANCE. THEREFORE, HE SUBMITTED THAT AS THERE IS NO CHANGE INTO FACTS, THE DISALLOWANCE MADE AND CONFIRMED BY THE LD. CIT (A) MAY BE DELETED. 3.2. ON THE CONTRARY, THE LD. D/R SUPPORTED THE ORD ER OF THE AUTHORITIES BELOW. 3.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 354/JP/2014 AND OTHERS PERTAINING TO ASSESSMENT YEAR 2010-11 HAD DELETED T HE DISALLOWANCE BY OBSERVING IN PARA 7.3 OF ITS ORDER AS UNDER :- 7.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE TRIBUNAL IN R ESPECT OF THE EXPENSES I.E. STAFF WELFARE EXPENSES, CHARGES GENER AL EXPENSES, GIFT EXPENSES SALES AND PROMOTION EXPENSES IN AY 2009-10 IN ITA NOS. 361 & 419/JP/2012 DELETED THE DISALLOWANCE BY OBSERVING AS UNDER:- 6.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE FOU ND THAT THE AO HAS MADE THE DISALLOWANCE BY MAKING OBSERVATION THA T ASSESSEE HAS FAILED TO PRODUCE SUPPORTING EVIDENCE OR EXPENDITUR E ARE EITHER PERSONAL IN NATURE OR NOT FOR BUSINESS PURPOSE OR C OMPLETE DETAILS WERE NOT FILED. ON THE OTHER HAND, LD. AR CONTENDE D THAT AO HAS MADE THE DISALLOWANCE ON ADHOC BASIS WITHOUT SPECIF YING THAT DETAILS OF WHICH EXPENDITURE REQUIRED BY THE AO IS NOT GIVE N. IT IS STATED THAT ALL EXPENSES ARE DULY SUPPORTED BY EVIDENCE AND THE REFORE SUCH ADHOC DISALLOWANCE IN UNJUSTIFIED. IT IS ALSO PLEADED TH AT ONCE FBT IS PAID ON THE EXPENDITURE CLAIMED, THE SAME CANNOT BE DISALLO WED IN THE TAX 4 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. COMPUTATION FOR WHICH DECISION OF THE CO-ORDINATE B ENCH IS RELIED UPON. WE AGREE WITH THE ARGUMENTS OF THE LD. AR TH AT NO ADHOC DISALLOWANCE CAN BE MADE. WE NOTE THAT ASSESSEE HA S FILED THE COMPLETE DETAILS OF EXPENDITURE AS REQUIRED BY THE AO. THE AO HAS NOT SPECIFIED ANY PARTICULARS EXPENDITURE WHICH IS FOR PERSONAL USE OR FOR NON-BUSINESS PURPOSE. IT IS A CASE OF A CORPOR ATE ENTITY WHERE THE CONTRIBUTION MADE TO GRAM PANCHAYAT FOR VARIOUS WEL FARE MEASURES AT A PLACE WHERE THE FACTORY OF ASSESSEE IS LOCATED AS A PART OF ITS SOCIAL OBLIGATION IS AN ALLOWABLE BUSINESS EXPENDITURE AS HELD IN VARIOUS CASES REFERRED IN GROUND NO.3 ABOVE. FURTHER, WE A GREE WITH THE CONTENTION OF THE ASSESSEE THAT ONCE FBT IS PAID TH E EXPENDITURE CANNOT BE SUBJECT MATTER OF DISALLOWANCE AS HELD BY THIS BENCH IN CASE OF M/S NATURAL STATE & SANDSTONE EXPORTS (P) LTD. I N ITA NO. 1090/JP/10 DATED 04.02.2011. THE FINDING OF LD. CI T (A) THAT TO THE EXTENT THE EXPENDITURE IS DISALLOWED, FBT SHOULD NO T BE CHARGED IS THEREFORE NOT CORRECT. WE, THEREFORE, DELETE THE V ARIOUS ADHOC DISALLOWANCES MADE BY THE AO AND CONFIRMED BY THE L D. CIT (A). THUS, GROUND NO. 4 AND 5 OF ASSESSEE'S APPEAL ARE A LLOWED AND THE SOLITARY GROUND RAISED BY THE REVENUE IN ITS APPEAL IS DISMISSED. THE REVENUE HAS NOT BROUGHT ANY CONTRARY MATERIAL O N RECORD SUGGESTING THAT THE FACTS ARE DIFFERENT. THEREFORE, TAKING A CONSISTEN T VIEW IN THE MATTER, THIS GROUND OF THE ASSESSEES APPEAL IS PARTLY ALLOWED. THE AO IS DIRECTED TO DELETE THE DISALLOWANCE OF EXPENSES I.E. STAFF WELFARE EXPENSES, CHARGES GE NERAL EXPENSES, GIFT EXPENSES AND SALES PROMOTION EXPENSES. 3.4. REGARDING TAXI HIRING EXPENSES, WE FIND THAT T HE ASSESSEE HAD CLAIMED THAT THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSES FR OM THE DETAILS FURNISHED BEFORE THE ASSESSING OFFICER. THE AO MADE THE DISALLOWANC E BY HOLDING THAT THE USE OF HIRED VEHICLES FOR PURPOSES OTHER THAN BUSINESS OF THE ASSESSEE CANNOT BE RULED OUT. SIMILAR DISALLOWANCE WAS MADE IN THE A.Y. 2010-11 A GAINST WHICH ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A), WHO REDUCED THE DISALLOW ANCE TO 10% ON THE GROUND THAT THE EXPENSES ARE IN THE NATURE OF NON-VERIFIABLE AN D ELEMENT OF NON BUSINESS USE. THE TRIBUNAL AFTER CONSIDERING THE MATTER, CONFIRME D THE ORDER OF LD. CIT (A) BY SUSTAINING THE DISALLOWANCE @ 10%. THE FACTS ARE SA ME IN THE YEAR UNDER 5 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. CONSIDERATION. THEREFORE, WE FIND NO REASON TO INTE RFERE IN THE ORDER OF LD. CIT (A), THE SAME IS HEREBY AFFIRMED TO THE EXTENT OF TAXI H IRING EXPENSES. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 5. NOW WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO. 461/JP/2017 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN :- I) DELETING THE DISALLOWANCE OF ADDITIONAL EXPENSES OF RS. 1,98,910/- PERTAINING TO THE YEAR UNDER CONSIDERATI ON BUT BOOKED/PAID SUCCEEDING YEAR IGNORING THE FACT THAT THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING; II) DIRECTING THE AO THAT COMPENSATION OF RS. 3,92,03,2 05/- PAID TO THE FARMERS IS TO BE ALLOWED OVER A PERIOD OF 20 YE ARS, CONSEQUENTLY GIVING RELIEF OF RS. 19,60,160/- FOR T HE CURRENT YEAR; III) DELETING THE DISALLOWANCE OF RS. 2,45,099/-, RS. 79 ,39,737/- AND RS. 3,38,996/- CLAIMED AS MINING RIGHTS; IV) DELETING THE DISALLOWANCE OF RS.1,32,28,375/- MADE U/S 37(1) ON ACCOUNT OF PAYMENT OF DEMURRAGE; V) DELETING THE DISALLOWANCE OF RS. 33,43,330/- OUT OF SOCIAL WELFARE EXPENSES; VI) REDUCING THE DISALLOWANCE FROM RS. 83,44,306/- TO R S. 10,00,000/- OUT OF STAFF WELFARE EXPENSES. VII) RESTRICTING THE DISALLOWANCE TO RS. 10,05,385/- AGA INST 3,00,000/- MADE OUT OF GENERAL CHARGES EXPENSES; VIII) REDUCING THE DISALLOWANCE FROM RS. 65,50,387/- TO R S. 30,00,000/- OUT OF SALES PROMOTION EXPENSES; IX) DELETING THE DISALLOWANCE OF GARDENING EXPENSES OF RS. 68,21,188/-; 6 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. X) REDUCING THE DISALLOWANCE FROM 6,52,298/- TO 3,26,1 49/- MADE OUT OF TAXI HIRING CHARGES; XI) DELETING THE DISALLOWANCE OF RS. 33,79,947/- MADE U /S 37(1) ON ACCOUNT OF RAILWAY SIDING EXPENSES; XII) DELETING ADDITION OF RS. 20,23,898/- MADE U/S 14A B Y IGNORING THE CBDT CIRCULAR 5/2014; XIII) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONAL GR OUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. 6. GROUND NO. (I) RELATES TO DELETING THE DISALLOWA NCE OF ADDITIONAL EXPENSES OF RS. 1,98,910/- PERTAINING TO THE YEAR UNDER CONSIDE RATION. 6.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND OPPOSED THE SUBMISSIONS OF THE ASSESSEE. 6.2. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSION. HE SUPPORTED THE ORDER OF THE L D. CIT (A). HE FURTHER SUBMITTED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE ORD ER OF COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2008-09 WHEREIN SIMILAR DISALLOWANCE WAS DELETED. 6.3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FO R THE ASSESSMENT YEAR 2008-09 HAD DELETED THE DISALLOWANCE BY OBSERVING IN PARA 9 .1 OF ITS ORDER AS UNDER :- 9.1. APROPOS REVENUE GROUND NO. (II) ALSO WE SEE NO INFIRMITY IN THE ORDER OF LD. CIT (A) IN RESPECT OF EXPENDITURE OF R S. 4,75,121/- AS IT HAS NOT BEEN DISPUTED THAT SAME PERTAINED TO AY 2008-09 AND WAS BOOKED 7 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. IN SUBSEQUENT YEAR BEFORE FILING OF THE AUDIT REPOR T. IT IS TRITE LAW THAT ASSESSEE CAN CLAIM SUCH EXPENDITURE RELATING TO A Y EAR WHICH IS THOUGH ACCOUNTED FOR IN SUBSEQUENT YEAR BUT BEFORE FILING OF THE AUDIT REPORT. IN ANY CASE IT WILL AMOUNT TO POSTPONEMENT OF LIABI LITY AND IN SUCH EVENTUALITY HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF EXCEL INDUSTRIES IS ALSO APPLICABLE. THEREFORE, THIS GROU ND OF THE REVENUE IS DISMISSED. THEREFORE, TAKING A CONSISTENT VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE LD. CIT (A) BY DISMISSING THE GROUND OF THE REVENUE. 7. GROUND NO. (II) RELATES TO DIRECTING THE AO TO A LLOW COMPENSATION OF RS. 3,92,03,205/- PAID TO THE FARMERS OVER A PERIOD OF 20 YEARS, CONSEQUENTLY GIVING RELIEF OF RS. 19,60,160/- FOR THE CURRENT YEAR. 7.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT LD. CIT (A) WAS NOT JUSTIFIED IN GIVING THE DIRECTION TO ALLOW THE EXPENDITURE OVER A PERIOD OF 20 YEARS. 7.2. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUPPORTED THE ORDER OF THE LD. CI T (A). THE LD. COUNSEL SUBMITTED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE ORD ER OF COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 WHEREBY SIMILAR DISALLOWANCE WAS DELETED. HE FURTHER RELIED ON THE ORDER OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF RSMM LTD. IN ITA NO. 466/JP/2006 AND 614/JP /2006 FOR THE A.Y. 2002-03. 7.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT ON THIS ISSUE, THE LD. CIT 8 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. (A) PLACED RELIANCE ON THE ORDER OF HIS PREDECESSOR LD. CIT (A) IN APPEAL NO. 239/12- 13 FOR THE ASSESSMENT YEAR 2010-11 DATED 27.03.2014 WHO HAS OBSERVED AS UNDER :- IN MY OPINION, THE MAIN PURPOSE OF ACQUIRING THE LAND WAS TO EXTRACT LIME STONE WHICH IS THE RAW MATERIAL FOR ASSESSEE. AFTER THE EXTRACTION THE LAND BECOMES UNUSABLE FOR ANY OTHER PURPOSE. THE ASSESSEE CANNOT USE THIS LAND PERPETUALLY AS IN THE CASE OF A NORMAL AGRICULTURE OR RESIDENTIAL LAND, THIS LAND C AN BE USED TILL ITS DEPOSIT (I.E. LIME STONE) LASTS. THEREFORE, I AGREE WITH THE FINDING OF AO IN A.Y. 2008-09 WHEREIN HE HAS ALLOWED SUCH EXPENDI TURE IN 20 EQUAL INSTALMENTS. CONSIDERING THE ABOVE, THE A.O. IS DIRECTED TO ALLO W THIS EXPENDITURE EQUALLY IN 20 YEARS INCLUDING THE CURRENT YEAR. THE LD. CIT (A) FOLLOWING THE ABOVE OBSERVATIONS OF HIS PREDECESSOR CIT (A), HELD THAT THE LEASE RENT PAID BY THE APPELLANT FOR ACQUI RING LEASE HOLD RIGHT FOR EXTRACTING MINERALS FROM MINERAL BEARING LAND WOULD BE CAPITAL EXPENDITURE AND THEREBY CONFIRMED THE ADDITION OF RS. 3,92,03,205/-. HOWEVE R, THE LD. CIT (A) DIRECTED THE AO TO ALLOW THIS EXPENDITURE EQUALLY IN 20 YEARS IN CLUDING THE CURRENT YEAR. THE AO WAS DIRECTED TO ALLOW EXPENDITURE OF RS. 19,60,160/ - FOR THE YEAR UNDER CONSIDERATION. 7.4. THERE IS NO DISPUTE WITH REGARD TO THE FACT TH AT THE AO HIMSELF HAD ALLOWED EXPENDITURE IN 20 EQUAL INSTALMENTS IN AY 2008-09. IN THE YEAR UNDER APPEAL, THE REVENUE HAS NOT DEMONSTRATED THE CHANGE INTO THE FA CTS AND THE REASON FOR CHANGING THE STAND. THEREFORE WE DO NOT SEE ANY REA SON TO INTERFERE INTO THE ORDER OF LD. CIT (A), SAME IS HEREBY AFFIRMED. THIS GROUN D OF THE REVENUE IS DISMISSED. 9 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. 8. GROUND NO. (III) RELATES TO DELETING THE DISALLO WANCE OF RS. 2,45,099/-, RS. 79,39,737/- AND RS. 3,38,996/- CLAIMED AS MINING RI GHTS. 8.1. THE LD. D/R SUPPORTED THE ORDER OF THE A.O AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. 8.2. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATE D THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUPPORTED THE ORDER OF LD. CI T (A). THE LD. COUNSEL SUBMITTED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE ORD ER OF COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEARS 2012-13 AND 2010-11. 8.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT THE COORDINATE BENCH OF THE TRIBUNAL FOR THE A.Y. 2010-11 IN THE ASSESSEES OWN CASE HAD DECIDED THE IDENTICAL ISSUE BY OBSERVING IN PARA 18.3 AND 18.4 OF ITS ORDER AS UNDER :- 18.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) DELETED THE DI SALLOWANCE BY OBSERVING AS UNDER:- I HAVE GONE THROUGH AOS FINDINGS AND ASSESSEES S UBMISSION. IN THE ASSESSMENT ORDER FOR AY 2008-09, THE AO HELD THAT AN AMOUNT OF RS. 3,82,75,607/- IS TO BE ALLOWED IN SIX EQUAL INSTALLMENTS. SIMILARLY, IN AY 2009-10, THE AO HEL D THAT A SUM OF RS. 67,79,925/- IS TO BE ALLOWED IN 20 YEARS. IN MY OPINION, FINDING OF ONE AO CANNOT BE DISTURBE D BY HIS SUCCESSOR. THE PROPER COURSE COULD BE TO INVOKE PRO VISIONS OF SECTION 263. THE SAME WAS NOT DONE BY THE AO, THER EFORE, HE SHOULD NOT HAVE DISTURBED THE FINDING OF HIS PREDEC ESSOR. SECONDLY, WHILE DECIDING GROUND NO. 1, I HAVE HELD THAT SIMILAR EXPENDITURE WAS ALLOWABLE IN 20 EQUAL INSTALLMENTS. 10 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. CONSIDERING THE ABOVE, THE AO IS DIRECTED TO DELETE ADDITION OF RS. 79,39,737/- & RS. 3,38,996/-. 18.4 THE REVENUE HAS NOT DISPUTED THAT IN THE AY 2008-0 9, 2009-10 THE AO HAD ALLOWED THE CLAIM OF THE ASSESSEE IN 6 Y EARLY INSTALLMENTS AND 20 YEARLY INSTALLMENTS RESPECTIVELY. THE REVEN UE HAS NOT POINTED OUT ANY CHANGE INTO FACTS AND CIRCUMSTANCES FOR TAK ING A DIFFERENT STANDS. THEREFORE, WE DO NOT SEE ANY REASON TO INT ERFERE INTO THE ORDER OF THE LD. CIT(A), SAME IS HEREBY AFFIRMED, T HIS GROUND OF REVENUES APPEAL IS DISMISSED. THE COORDINATE BENCH OF THE TRIBUNAL HAS ALSO ADJUD ICATED IDENTICAL ISSUE IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13 BY REJECTING THE GROUNDS OF THE REVENUE. IN THE YEAR UNDER CONSIDERATION THE F ACTS ARE IDENTICAL TO ASSESSMENT YEAR 2010-11 AND 2012-13. THEREFORE, FOLLOWING THE ORDERS OF THE TRIBUNAL FOR ASSESSMENT YEARS 2010-11 & 2012-13 AND TAKING A CON SISTENT VIEW OF THE MATTER, WE AFFIRM THE ORDER OF THE LD. CIT (A) BY DISMISSING T HE GROUND OF THE REVENUE. THIS GROUND OF THE REVENUE IS DISMISSED. 9. GROUND NO. (IV) RELATES TO DELETING THE DISALLOW ANCE OF RS. 1,32,28,375/- MADE UNDER SECTION 37(1) ON ACCOUNT OF PAYMENT OF D EMURRAGE. 9.1. THE LD. D/R SUPPORTED THE ORDER OF THE ASSESSI NG OFFICER AND SUBMITTED THAT LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE DISAL LOWANCE. THE LD. D/R SUBMITTED THAT THE AO MADE THE DISALLOWANCE ON THE BASIS THAT THE EXPENDITURE WAS IN THE NATURE OF FINE AND ALSO ON THE GROUND THAT THERE WAS A CLAUSE INTO THE AGREEMENT WHICH INDEMNIFY/MANDATED C & F AGENT TO INDEMNIFY THE ASS ESSEE. 11 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. 9.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUBMITTED THAT TH E CASE OF THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO ORDINATE BENCH IN THE ASSESSEES OWN CASE FOR THE A.Y. 2010-11. HE SUPPORTED THE OR DER OF THE LD. CIT (A). 9.3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROU GH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE TRIBUNAL HAD D ECIDED IDENTICAL ISSUE FOR THE ASSESSMENT YEAR 2010-11 BY OBSERVING IN PARA 15.3 A S UNDER :- 15.3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) HAS GIVEN A FINDING ON FACT THAT THERE IS NO CLAUSE BY WHICH TH E DEMURRAGES WAS REQUIRED TO BE PAID BY THE C & F AGENT NOT BY THE A SSESSEE. IT IS ALSO NOT BROUGHT ON RECORD BY THE REVENUE THAT THE ASSES SEE HAD CLAIMED SUCH EXPENDITURE FROM C & F AGENT. UNDER THESE FAC TS, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE D ECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MAHALAXMI S UGAR MILLS CO. LTD. VS. CIT AND HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF NANHOOMAL JYOTI PRASAD VS. CIT (SUPRA). WE DO NOT SEE ANY ME RIT INTO THE GROUND OF REVENUES APPEAL, SAME IS HEREBY AFFIRMED. THIS GROUND IS DISMISSED. THEREFORE, BY FOLLOWING THE ORDER OF THE TRIBUNAL A ND TAKING A CONSISTENT VIEW OF THE MATTER, WE DISMISS THE GROUND OF THE REVENUE. 10. GROUND NO. (V) RELATES TO DELETING THE DISALLOW ANCE OF RS. 33,43,330/- OUT OF SOCIAL WELFARE EXPENSES. 12 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. 10.1. THE LD. D/R SUPPORTED THE ORDER OF THE ASSESS ING OFFICER AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE D ISALLOWANCE. 10.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUPPORTED THE ORD ER OF LD. CIT (A). THE LD. COUNSEL SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.YS. 2010-11, 2009-10 AND 2008-09. 10.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE COORDINATE BENCH OF THE T RIBUNAL HAD ADJUDICATED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE AS SESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 BY OBSERVING IN PARA 5.3 OF ITS ORDER AS UNDER :- 5.3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THESE EXPENSES WER E MADE ON ADHOC BASIS WHICH IN OUR CONSIDERED VIEW, IS NOT A JUSTIF IED WAY. THEREFORE, TAKING A CONSISTENT VIEW AS TAKEN BY THE COORDINATE BENCHES IN EARLIER YEARS IN ASSESSEES OWN CASE, WE DIRECT THE AO TO D ELETE THE DISALLOWANCE. THEREFORE, BY FOLLOWING THE ORDER OF THE TRIBUNAL A ND TAKING A CONSISTENT VIEW OF THE MATTER, WE DISMISS THE GROUND OF THE REVENUE. 11. GROUND NOS. (VI) TO (X) OF THE DEPARTMENT RELAT E TO REDUCING/RESTRICTING/DELETING THE DISALLOWANCES OF VARIOUS EXPENSES ON ACCOUNT OF 13 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. STAFF WELFARE EXPENSES, GENERAL CHARGES EXPENSES, S ALES PROMOTION EXPENSES, GARDENING EXPENSES AND TAXI HIRING CHARGES. 11.1. WE HAVE DEALT WITH THESE ISSUES IN THE ASSESS EES APPEAL IN ITA NO. 362/JP/2017 IN PARA 3.3 ABOVE. THE ISSUES ARE COVE RED BY THE DECISION OF THE COORDINATE BENCH IN FAVOUR OF THE ASSESSEE IN THE A SSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 IN REVENUES APPEAL IN ITA NO. 425/JP/2014 VIDE PARA 13 AND 13.1. SINCE WE HAVE ALREADY DECIDED THESE GROUN DS IN THE ASSESSEES APPEAL (SUPRA), FOR THE SAME REASONING, THESE GROUNDS OF T HE REVENUE ARE DISMISSED. HENCE GROUND NOS. (VI), (VII), (VIII), (IX) AND (X) ARE DISMISSED. 12. GROUND NO. (XI) RELATES TO DELETING THE DISALL OWANCE OF RS. 33,79,947/- MADE UNDER SECTION 37(1) ON ACCOUNT OF RAILWAY SIDING EX PENSES. 12.1. THE LD. D/R SUPPORTED THE ORDER OF THE ASSESS ING OFFICER AND SUBMITTED THAT LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE DISAL LOWANCE. 12.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUPPORTED THE ORDE R OF THE LD. CIT (A). THE LD. COUNSEL SUBMITTED THAT THE ISSUE IS DECIDED IN FAVO UR OF THE ASSESSEE BY THE DECISION OF COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11. 12.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT THE COORDINATE BENCH OF THE TRIBUNAL ADJUDICATED THIS ISSUE FOR THE ASSESSM ENT YEAR 2010-11 BY OBSERVING IN PARA 16.3 OF ITS ORDER AS UNDER : 14 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. 16.3 . WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE WHICH REQU IRED TO BE ADJUDICATED IS WHETHER THE AO WAS JUSTIFIED IN DISA LLOWANING THE CLAIM OF THE EXPENDITURE INCURRED ON MAINTENANCE OF RAILW AY TRACK AT THE RAILWAY SIDING. THE AO WHILE DISALLOWING THE EXPEN DITURE AS RELIED UPON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. MADURA COATS 205 TAXMAN 357. THE CONTENTIO N OF THE ASSESSEE IS THAT THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IS NOT APPLICABLE AS THE FACT IS THAT THE CASES WERE WITH REGARD TO REPLACEMENT OF OLD MACHINERY AND RENOVATION OF THE BUILDINGS. WE FIND THAT IN THE CASE OF CIT VS. MADURA COATS (SUPRA) TH E AO DISALLOWED THE CLAIM IN RESPECT OF REPLACEMENT OF AUTO CORNER ETC BY HOLDING THAT REPLACEMENT OF OLD MACHINERY CANNOT BE TREATED AS T HE REVENUE EXPENDITURE. THIS VIEW OF THE AO WAS UPHELD BY THE HONBLE HIGH COURT. IN THE PRESENT CASE, IT IS NOT THE CASE OF R EPLACEMENT OF OLD MACHINERY BY NEW MACHINERY AND REPAIR OF RENTED BUI LDINGS. IN THE PRESENT CASE THE EXPENDITURE IS INCURRED ON THE DAY TO DAY MAINTENANCE OF THE RAILWAY TRACKS AT THE RAILWAY SI DING. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE INTO THE ORDER O F THE LD. CIT(A), SAME IS HEREBY AFFIRMED. THIS GROUND OF REVENUES APPEAL IS DISMISSED. IN VIEW OF THE ABOVE OBSERVATION AND TAKING A CONSI STENT VIEW OF THE MATTER, WE AFFIRM THE ORDER OF LD. CIT (A) AND REJECT THE GROU ND OF THE REVENUE. 13. GROUND NO. (XII) RELATES TO DELETING THE ADDITI ON OF RS. 20,23,898/- MADE U/S 14A BY IGNORING THE CBDT CIRCULAR 5/2014. 13.1. THE LD. D/R SUPPORTED THE ORDER OF THE ASSESS ING OFFICER. 15 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. 13.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUPPORTED THE ORDE R OF THE LD. CIT (A). THE LD. COUNSEL PLACING RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. ITO, 378 ITR 33 (DEL.) SUBMITTE D THAT THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. HE FURTHER SUBMITTED THAT N O DISALLOWANCE U/S 14A WAS MADE IN THE ASSESSMENT YEAR 2012-13 WITH REFERENCE TO IN VESTMENT IN SHARES OF MANGALAM TIMBER PRODUCTS LTD. THEREFORE, HE SUBMITTED THAT T HE LD. CIT (A) HAS JUSTIFIED IN DELETING THE ADDITION. 13.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FI ND THAT THE LD. CIT (A) WHILE DECIDING THE ISSUE HAS ELABORATELY DISCUSSED THE MA TTER. THE LD. CIT (A) HAS DELETED THE ADDITION BY OBSERVING AT PAGE 77 AND 78 OF HIS ORDER AS UNDER : I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AO S FINDINGS. THE DELHI HIGH COURT IN THE RECENT CASE OF CHEMINVE ST LTD. V. CIT (2015) 378 ITR 33/234 TAXMAN 761/61 TAXMAN.COM 118 HELD THAT THERE SHOULD BE AN ACTUAL RECEIPT OF EXEMPT INCOME DURING THE RELEVANT YEAR FOR THE PURPOSE OF DISALLOWANCE OF ANY EXPENDI TURE INCURRED IN RELATION TO SUCH INCOME. OVER RULING ITAT SPECIAL B ENCHS (SB) RULING IN THIS CASE AND FOLLOWING ITS OWN PRIOR RULING IN THE CASE OF CIT V. HOLCIM INDIA (P) LTD. (2015) 57 TAXMANN.COM 28 (DELHI), TH E DELHI HC HELD THAT THERE CAN BE NO DISALLOWANCE OF EXPENSE IF NO EXEMPT INCOME IS ACTUALLY EARNED DURING THE RELEVANT TAX YEAR. HIGH COURT OF MADRAS IN REDINGTON (INDIA) LTD. V. A DDITIONAL COMMISSIONER OF INCOME-TAX, CO. RANGE-V, CHENNAI, 7 7 TAXMANN.COM. 257 (MADRAS) HAS RECENTLY HELD VIDE ORDER DATED DECEMBER 23, 201 6 THAT SECTION 14A OF THE INCOME-TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 EXPENDITURE INCURRED IN RE LATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (CONDITION PRECEDENT ) ASSESSMENT YEAR 16 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. 2007-08 WHETHER PROVISION OF SECTION 14A IS RELAT ABLE TO EARNING OF ACTUAL INCOME AND NOT NOTIONAL OR ANTICIPATED INCOM E, HENCE, WHERE THERE IS NO EXEMPT INCOME IN A YEAR, THERE CANNOT B E A DISALLOWANCE OF EXPENDITURE IN RELATION TO AN ASSUMED INCOME HELD , YES. THUS THE DISALLOWANCE MADE BY THE A.O. IS NOT HELD TO BE JUSTIFIED AND IS TO BE DELETED. THE GROUND OF APPEAL IS THEREFORE ALLOWED. THE COORDINATE BENCH OF THE TRIBUNAL HAS DECIDED TH IS ISSUE IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 BY OBSERVING I N PARA 19.3 OF ITS ORDER AS UNDER :- 19.3 WE HAVE HEARD THE RIVAL CONTENTIONS, THIS ISSUE WE HAVE DECIDED IN ASSESSEES APPEAL BY OBSERVING AS UNDER:- 8.2 WE HAVE HEARD THE RIVAL CONTENTIONS WE FIND MERIT INTO THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROVISIONS OF SECTION 14A CAN BE INVOKED IN THE EVE NT OF THE AO IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE EXPENDITURE RELATED TO THE EXEMPT INCOME. THE HON BLE SUPREME COURT IN THE RECENT JUDGMENT IN THE CASE OF CIT VS. GODREJ BOYCER VS CIT HAS HELD THAT PROVISION OF SEC TION OF 14A CAN BE INVOKED WHEN THE AO IS DISSATISFIED WITH THE CLAIM OF EXPENDITURE RELATED TO THE EXEMPT INCOME. 8.3 IN THE PRESENT CASE THE LD. CIT(A) HAS RECOMPUTED THE DISALLOWANCE BY APPLYING RULE 8D. HE HAS DISALLOWE D INTEREST EXPENDITURE OF RS. 2,38,454/- AND ADMINISTRATIVE EX PENSES OF RS. 6,89,497/-. THE GRIEVANCE OF THE ASSESSEE IS T HAT THE NO INTEREST EXPENDITURE IS RELATED TO THE EXEMPT INCOM E. AS IT IS CLAIMED THAT THE ENTIRE INVESTMENT IN MUTUAL FUNDS HAVE BEEN MADE FROM OWN FUND. THE LD. CIT(A) HAS NOT GIVEN A NY REASON AS TO WHY THE CONTENTION OF THE ASSESSEE IS NOT ACC EPTABLE. REVENUE HAS NOT PLACED ANY MATERIAL REBUTTING THE C LAIM OF THE ASESSEE. THEREFORE, OUT OF DISALLOWANCE OF RS. 9,2 7,956/- A SUM OF RS. 2,38,454/- IS DELETED AND RS. 6,89,497/- IS SUSTAINED. THIS GROUND IS PARTLY ALLOWED. 17 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA. THEREFORE, TAKING A CONSISTENT VIEW, THERE IS NO CH ANGE INTO FACTS AND CIRCUMSTANCES. THIS GROUND OF THE REVENUES APPEAL IS REJECTED. IN VIEW OF THE ABOVE, AND FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WE FIND NO REASON TO INTERFERE IN THE ORD ER OF THE LD. CIT (A), SAME IS HEREBY AFFIRMED. THE GROUND OF THE REVENUE IS DISM ISSED. 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. 15. IN TOTALITY, APPEAL OF THE ASSESSEE IS PARTLY A LLOWED WHEREAS APPEAL OF THE REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.09.2 017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 13/09/2017. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. MANGALAM CEMENT LTD., KOTA. 2. THE RESPONDENT THE ACIT, CIRCLE-1, KOTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 362 & 461/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 18 ITA NOS. 362 & 461/JP/2017 M/S. MANGALAM CEMENT LTD., KOTA.