DCIT, Jaipur V. JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., Jaipur

ITA 508/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2131 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 09-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: P C PARWAL DHK
• Keywords: Business expenditure
• Section: 43B; 37(1); 80G

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 DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 508/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 DCIT CIRCLE-6 JAIPUR CUKE VS. JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD. NEAR GANDHI NAGAR RAILWAY STATION, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAAAJ0767G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SH. R. A. VERMA FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/08/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 09/08/2017. VKNS'K@ ORDER PER:SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 21.03.2017 WHEREIN THE REVENUE HAS TAK EN FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON OF RS. 1,31,21,958/- MADE BY THE AO IN DISALLOWING CONTRIBUTION MADE TO SPARSH TRUST WITHOUT APPRECIATING THE FACT THAT ASSESSEE FAILED TO PROVE DIRECT BUSINESS NEXUS AND IT IS NOT AN ALLOWABLE EXPENDITU RE U/S 37(1). 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON OF RS. 14,48,774/- MADE BY THE AO FOR DEPOSITING THE EMPLOYEES CONTRI BUTION TO PF & ESI BEYOND THE PRESCRIBED TIME LIMIT PROVIDED IN RESPEC TIVE ACTS. ITA NO. 508/JP/2017 DCIT, CIRCLE-6, JAIPUR VS JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD. 2 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT EMPLOY EES CONTRIBUTION TO PF & ESI ARE GOVERNED BY THE PROVISION OF SECTION 43B AND NOT BY SECTION 36(1)(VA) R.W.S. 2(24)(X)OF THE I.T.ACT. 2. AT THE OUTSET, THE LD AR SUBMITTED THAT THE ISSU E IN GROUND NO.1 OF THE REVENUES APPEAL IS COVERED IN FAVOUR OF THE ASSESS EE BY EARLIER ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008-09, 200 9-10, 2010-11 AND 2012- 13 RESPECTIVELY. 3. THE COORDINATE BENCH VIDE ITS ORDER DT. 15.03.2012 (IN ITA NO. 820/JP/11) FOR A.Y. 08-09 HAS GIVEN ITS FINDINGS AS UNDER: AFTER CONSIDERING THE SUBMISSIONS, ORDERS OF THE A UTHORITIES BELOW, WE FIND THAT ASSESSEE DESERVE TO SUCCEED IN ITS GROUND RAISED. IT IS NOTICED THAT BEFORE CREATING SPARSH, THE ASSESSEE WAS DOING ALL THESE EXPENDITURE ITSELF. JUST FOR BETTERMENT OF ADMINIST RATION SERVICES, THE ASSESSEE CREATED THE TRUST THROUGH WHOM THESE EXPEN SES ARE INCURRED. THE PROFIT & LOSS ACCOUNT OF THE TRUST IS MAINTAINE D, COPY OF WHICH IS PLACED IN THE COMPILATION AND IT IS SEEN THAT WHATE VER AMOUNT HAS BEEN GIVEN BY ASSESSEE OR REIMBURSED BY ASSESSEE, THAT H AS BEEN SPENT BY THE TRUST ON THE ANIMALS TO GET BETTER QUALITY AND QUANTITY OF MILK. THE ASSESSEE HAS CONTRIBUTED @ RS.0.05 PER LITRE OF MIL K PROCURED TO ITS TRUST FOR THE PURPOSE OF INCURRING EXPENDITURE FOR BETTER QUALITY OF MILK. AN AGENDA NOTE WAS PREPARED WHICH CLEARLY STATES TH AT THE PURPOSE OF CONTRIBUTION IS FOR MEDICAL AND HEALTH FACILITY OF THE ANIMALS OF THE MILK PRODUCERS AT THE DISTRICT LEVEL. THE CONTRIBUTION M ADE BY ASSESSEE TO TRUST IS THUS DIRECTLY LINKED WITH THE PROCUREMENT OF BETTER QUALITY, HYGIENIC AND MORE QUANTITY OF THE MILK. IT IS IN TH E INTEREST OF THE ASSESSEE THAT THE MILK ANIMALS AT THE VILLAGE LEVEL FROM WHERE IT PROCURES THE MILK ARE HEALTHY AND FOR THIS PURPOSE, SPARSH TRUST INCURRED EXPENDITURE IN PROVIDING VATERNITY CARE, R EGULAR TREATMENT, EMERGENCY CARE, PREVENTIVE CARE, BREED IMPROVEMENT THROUGH A.I. UNINTERRUPTED SUPPLY OF NUTRITIONAL SUPPLEMENT ETC. THEREFORE, IN OUR CONSIDERED VIEW, CONTRIBUTION MADE BY ASSESSEE TO T HIS TRUST IS AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WHICH IS ALLOWABLE U/S 37(1). FROM THE INCOME AND E XPENDITURE ACCOUNT OF THE TRUST, IT CAN BE NOTED THAT IT HAS INCURRED AN EXPENDITURE IN PURSUANCE OF ITS OBJECTIVES AND AFTER CONSIDERING T HE RECEIPTS, THERE IS ITA NO. 508/JP/2017 DCIT, CIRCLE-6, JAIPUR VS JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD. 3 DEFICIT TO THE TRUST IN THE YEAR UNDER CONSIDERATIO N. SUCH DEFICIT IS MET OUT OF THE CONTRIBUTION MADE BY ASSESSEE TO THE TRU ST. IT IS FURTHER SEEN THAT BEFORE CREATING THIS TRUST, THE ASSESSEE WAS I NCURRING ALL THESE EXPENSES ITSELF AND ALL THESE EXPENSES WERE ALLOWED BY THE DEPARTMENT WHILE COMPLETING ASSESSMENT U/S 143(3).THEREFORE, T HIS IS NOT A CASE THAT ASSESSEE HAS MADE DONATION TO ANY TRUST AND, T HEREFORE, THE SAME CANNOT BE ALLOWED AS BUSINESS EXPENDITURE. THE ID. CIT (A) HAS DISALLOWED THE CLAIM OF ASSESSEE BY OBSERVING THAT SINCE ASSESSEE HAS MADE DONATION U/S 80G AND, THEREFORE, DEDUCTION U/S 80G IS ALLOWABLE WHEREAS THE FACTS ARE OTHERWISE. THE ASSESSEE HAS N OT MADE ANY DONATION BUT HAS CONTRIBUTED TO THE TRUST FOR A SPE CIFIC PURPOSE I.E. TO INCUR THE EXPENDITURE TO GET BETTER MILK FROM MILK ANIMAL. VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE ARE IN SUPPORT OF THE CASE OF THE ASSESSEE. WE ARE NOT GETTING INTO DETAILS IN RESPEC T OF THOSE CASES AS THEY HAVE ALREADY BEEN MENTIONED IN THE WRITTEN SUB MISSIONS WHICH ARE REPRODUCED HEREIN ABOVE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE EXPENDITURE/CONTRIBUTION MADE BY ASSE SSEE IS ALLOWABLE AS BUSINESS EXPENDITURE. ACCORDINGLY, THE ADDITION MAD E AND CONFIRMED BY LOWER AUTHORITIES IS DELETED. 4. THE COORDINATE BENCHES IN SUBSEQUENT YEARS I.E, AY 2009-10, 2010-11 AND 2011-12 HAVE TAKEN A SIMILAR VIEW IN THE MATTER . THE LD CIT(A) HAS FOLLOWED THE SAID ORDERS WHILE ALLOWING THE RELIEF TO THE ASSESSEE FOR THE IMPUNGED ASSESSMENT YEAR. DURING THE COURSE OF HEA RING, THE LD DR ALSO FAIRLY CONCEDED THAT THE MATTER IS COVERED IN FAVOU R OF THE ASSESSEE BY EARLIER ORDERS OF THE TRIBUNAL. 5. UNDISPUTEDLY, THERE IS NO CHANGE IN THE FACTS AN D CIRCUMSTANCES OF THE CASE. NO CONTRARY AUTHORITY HAS BEEN BROUGHT TO OU R NOTICE. THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSESSEE BY TH E EARLIER DECISIONS OF THE COORDINATE BENCHES IN ASSESSEES OWN CASE. RESPECT FULLY FOLLOWING THE EARLIER DECISIONS OF THE COORDINATE BENCHES, THE CONTRIBUTI ON OF RS. 1,31,21,958 MADE BY THE ASSESSEE TO SPARSH TRUST IS ACCORDINGLY ALLOWED AS AN ELIGIBLE ITA NO. 508/JP/2017 DCIT, CIRCLE-6, JAIPUR VS JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD. 4 BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT . THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN GROUND NO.2 & 3 OF THE REVENUES APPEAL, THE DISALLOWANCE UNDER DISPUTE RELATES TO ADDITION OF RS. 14,48,774 MADE B Y THE AO FOR DEPOSITING THE EMPLOYEES CONTRIBUTION TO PF AND ESI BEYOND T HE PRESCRIBED LIMIT PROVIDED IN THE RESPECTIVE ACTS. 7. IN THIS REGARD, THE RELEVANT FINDING OF THE CIT( A) IS REPRODUCED AS UNDER: I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSME NT ORDER AND THE SUBMISSIONS OF THE APPELLANT. ADMITTEDLY, CONTRIBUTION TO PF & ESI HAS BEEN PAID BY THE APPELLANT, IN ALL INSTANCES, BEFOR E THE DUE DATE OF FILING THE RETURN OF INCOME U/S 139(1). THIS FACT IS THEREFORE, NOT IN DISPUTE. IN VIEW OF THE JUDGMENTS OF THE RAJASTHAN HIGH COURT IN THE CASE JAIPUR VIDHYUT NIGAM LTD., 265 CTR 62 (RAJ.), CIT V S. STATE BANK OF BIKANER & JAIPUR (2014) 99 DTR 131 (RAJ.), AND OTHER CASE LAW S ON THIS ISSUE, THE CLAIM OF THE APPELLANT IS ALLOWABLE. ACCORDINGLY, THIS DI SALLOWANCE MADE BY THE ASSESSING OFFICER IS, DIRECTED TO BE DELETED. THIS GROUND IS ALLOWED. 8. WE DONT FIND ANY INFIRMITY IN THE ORDER OF LD C IT(A) WHICH IS HEREBY CONFIRMED. THUS, GROUND NO. 2 & 3 OF REVENUES AP PEAL ARE DISMISSED. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/08/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. 508/JP/2017 DCIT, CIRCLE-6, JAIPUR VS JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD. 5 JAIPUR DATED:- 09/08/2017 *GANESH VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - DCIT CIRCLE-6 JAIPUR 2. IZR;FKHZ@ THE RESPONDENT - JAIPUR ZILA DUGDH UTPADAK SAHKARI SANGH LTD., JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 508/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.