JAALAWAR KENDRIYA SAHAKARI BANK LTD., Jaipur V. JCIT, Kota

ITA 515/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5336 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK
• Assessee Lawyers: DEEPAK GUPTA
• Keywords: Gift; Opportunity of being heard; Tax effect
• Section: 143(3); 194C; 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 515/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 JHALAWAR KENDRIYA SAHAKARI BANK LTD., OPPOSITE- SURYA MANDIR, MAIN MARKET, JHALARAPATAN, DISTRICT- JHALAWAR-326023 CUKE VS. J.C.I.T., RANGE-1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAATJ 2424 M VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 584/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA. CUKE VS. JHALAWAR KENDRIYA SAHAKARI BANK LTD., OPPOSITE- SURYA MANDIR, MAIN MARKET, JHALARAPATAN, DISTRICT- JHALAWAR-326023. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAATJ 2424 M VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI VINOD GUPTA & SHRI DEEPAK GUPTA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI G.R. PAREEK (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/05/2016 MN ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 24/05/2016 ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 2 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THESE ARE CROSS APPEALS, ONE BY THE ASSESSEE AND AN OTHER BY THE REVENUE ARISE AGAINST THE ORDER DATED 25/03/2013 PA SSED BY THE LEARNED C.I.T.(A), KOTA FOR THE A.Y. 2009-10. THE GROUNDS OF ASSESSEES AS WELL AS REVENUES ARE AS UNDER:- GROUNDS OF ITA NO. 515/JP/2013 (ASSESSEES APPEAL) 1 IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3) IS B AD IN LAW AND ON FACTS BEING AGAINST THE PRINCIPLE OF NATU RAL JUSTICE AND FOR MANY MORE OTHER REASONS. 2. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING CERTAIN EXPENSES AND MAKING ADDITION U/S 40(A)(IA) OF RS. 6,34,114/-, FURTHER, CIT(A) ERRED B Y SUSTAINING THE SAME. THE DISALLOWANCE AND ADDITION MA DE IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 3. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING THE PROVISION OF GRATUITY OF RS. 8,72,00 0/-, FURTHER, CIT(A) ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE IS UNJUSTIFIED, ILLEGAL OR EXCESSI VE. 4. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING PENSION LEAVE SALARY OF RS. 15,32,714/-, FURTHER, CIT(A) ERRED BY CONFIRMING THE DISALLOWANCE TO EXTENT OF RS. 9,24,253/-. THE DISALLOWANCE MADE/CONFIRMED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE . 5. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING PROVISION OF AGREEMENT ARREAR OF RS. ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 3 13,18,153/-, FURTHER, CIT(A) ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE IS UNJUSTIFIED, ILLEGAL OR EXCE SSIVE. 6. UNDER THE FACTS AND CIRCUMSTANCES, LD A.O. HAS E RRED BY MAKING ADDITION OF INTEREST INCOME OF RS. 89,563/-, FURTHER, CIT(A) ERRED BY CONFIRMING THE ADDITION TO EXTENT OF RS. 78,563/-. THE ADDITION MADE/SUSTAINED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 7. UNDER THE FACTS AND CIRCUMSTANCES, LD A.O. HAS E RRED BY MAKING ADDITION OF RS. 96,342/- ON ACCOUNT OF EXCES S CASH RECEIVED, FURTHER, CIT(A) ERRED BY SUSTAINING THE SA ME TO THE EXTENT OF RS. 32,489/-. THE ADDITION MADE/SUSTA INED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 8. UNDER THE FACTS AND CIRCUMSTANCES, THE LD A.O. H AS ERRED BY CHARGING INTEREST U/S 234B. THE APPELLANT TOTALLY DENIES ITS LIABILITY OF CHARGING OF ANY SUCH INTEREST. THE INTEREST, SO CHARGED, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 9. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. A.O. HAS ERRED BY INITIATING PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE ACT. GROUNDS OF ITA NO. 584/JP/2013 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN (I) DELETING THE DISALLOWANCE OF RS. 45,000/- ON A CCOUNT OF GANESH MAHOTASAVA EXPENSES, WHICH ARE NOT INCIDENTAL TO THE BUSINESS ACTIVITIES; (II) DELETING THE ADDITION OF RS. 94,84,714/- ON A CCOUNT OF LEAVE SALARY ENCASHMENT FUND U/S 43B(F), IGNORING T HE MATERIAL FACTS; ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 4 2. FIRST WE TAKE THE ASSESSEES APPEAL. GROUND NO. 1 OF THE APPEAL IS GENERAL IN NATURE. GROUND NO. 1 IS NOT PRESSED, THE REFORE WE DISMISS THE SAME AS NOT PRESSED. GROUND NO. 9 FOR INITIATION OF PENALTY PROCEEDING IS PREMATURE TO DECIDE. THERE IS NO BAR TO INITIATE THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. GROUND NO. 2 OF THE ASSESSEES APPEAL IS AGAINST DISALLOWANCE OF EXPENSES U/S 40(A)(IA) OF THE ACT AT RS. 6,34,114/- . THE ASSESSEE IS A COOPERATIVE BANK, FILED ITS RETURN FOR THE YEAR UND ER CONSIDERATION ON 2009-10 ON 26/9/2009 DECLARING TOTAL INCOME OF RS. 2,10,89,950/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE ACT ON 28/11/ 2011. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CL AIMED VARIOUS EXPENSES UNDER THE HEADS, PRINTING AND STATIONARY, ON WHICH NO TDS HAD BEEN DEDUCTED ON THE PAYMENT MADE EXCEEDING RS. 20, 000/-, TOTAL PAYMENTS MADE UNDER THIS HEAD AT RS. 4,08,331/- TO THE VARIOUS PARTIES, LEGAL FEES AT RS. 96,133/-, CONVEYANCE AT RS. 38,40 0/-,TENT HOUSE EXPENSES AT RS. 68,250/-, PAYMENT TO ANAND PUSHAP B AHNDAR AT RS. 24,000/-. THUS TOTAL PAYMENT OF RS. 6,35,114/- WERE MADE BY THE ASSESSEE WITHOUT DEDUCTING TDS, THEREFORE, HE MADE TH E ADDITIONS. ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 5 3.1 THE LD CIT(A), CONFIRMED THE ADDITION BY OBSERVIN G THAT INTENTION OF TDS PROVISION WAS TO COLLECT THE REVENUE, TO EXTEN D ALL THE PERSONS COVERED BY THE PROVISIONS, DETERRENT TO ENSURE COMP LIANCE, SUPPRESS THE MISCHIEF AND ADVANCE THE REMEDY. THIS PROVISION APP LICABLE ONLY ON BOTH THE AMOUNTS PAYABLE AND PAID. VAT IS NOT A CONCLUSIV E INDICATOR FOR DECIDING WHETHER THE CONTRACT WAS FOR SALE OR WORK. THE REFORE, HE CONFIRMED THE ADDITION OF RS. 6,35,144/-. 3.2 NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED THAT THE PRINTING AND STATIO NARY EXPENSES IS FOR PURCHASE OF CHEQUE BOOKS, PASSBOOKS, SPECIMEN SIGNA TURE CARDS, LEDGERS, FIXED DEPOSIT BOOKS, WITHDRAWAL/DEPOSIT FORM S ETC., ON WHICH VAT HAD BEEN PAID BY THE ASSESSEE ON SUCH PURCHASES. THE RAW MATERIAL WAS SUPPLIED BY THE SUPPLIER; THEREFORE, EXPENDITURE S ARE IN THE NATURE OF SALES TO THE APPELLANT. THE CBDT IN CIRCULAR NO. 681 DATED 08/3/1994 HAS CLARIFIED IN PARA 7(VI)(B) THAT WHERE CONTRACTO R UNDERTAKES TO SUPPLY ANY ARTICLE OR THING FABRICATED ACCOUNTING TO SPECI FICATIONS GIVEN BY THE GOVT. OR ANY OTHER SPECIFIED PERSONS AND THE PROPER TY IN SUCH ARTICLE OR THING PASSES TO THE GOVERNMENT OR SUCH PERSON ONLY AFTER SUCH ARTICLE OR THING IS DELIVERED, THE CONTRACT WILL BE CONTRACT FO R SALE AND SHALL BE OUTSIDE THE PURVIEW OF SECTION 194C. ACCORDINGLY, DI SALLOWANCE MADE BY ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 6 THE ASSESSING OFFICER CONFIRMED BY THE LD CIT(A) IS NOT JUSTIFIED. THE HON'BLE SUPREME COURT IN THE CASE OF CIT-XVII, DELH I VS SILVER OAK LABORATORIES P. LTD. HAS HELD THAT SUCH TRANSACTION IS CONTRACT FOR CARRYING OUT WORK, HENCE, SECTION 194C OF THE ACT IS NOT ATTRACTED. HE FURTHER RELIED ON THE FOLLOWING CASE LAWS: (I) BDA LTD. VS ITO 281 ITR 99 (BOM). (II) CIT VS DABUR INDIA LTD. 283 ITR 197 (DELHI). (III) CIT VS SPICE TELECOMMUNICATIONS (P) LTD. 369 ITR 0072 (KARN). (IV) ITO VS BATA INDIA PVT. LTD. ITA NO. 4887/DEL/20 09 (ITAT DELHI). (V) TUAREG MARKETING PVT. LTD. VS. ACIT 122 TTJ 343 (I TAT DELHI). VI) ITO VS AMBICA AGENCIES ITA NO. 2055/KOL/2008 (IT AT KOLKATA) (VII) DCIT VS ELGIE ENGINEERING WORKS (ITAT CALCUTTA ) ITA NO. 178/KOL/2010. THEREFORE, HE PRAYED TO DELETE THE ADDITION CONFIRME D BY THE LD CIT(A). ALTERNATIVELY, HE FURTHER ARGUED THAT ALL THESE AMO UNTS HAD BEEN PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. H E RELIED UPON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT VS. VECTOR SHIPPING SERVICES (P) LTD. 94 DTR 101/357 ITR 642 WHE REIN IT HAS BEEN HELD THAT PROVISIONS OF SECTION 40(A)(IA) IS APPLIC ABLE ONLY ON AMOUNT ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 7 PAYABLE AT THE END OF THE YEAR NOT ALREADY PAID AGA INST WHICH SLP FILED BY THE DEPARTMENT HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT. THEREFORE, ADDITION CONFIRMED BY THE LD CIT(A) IS REQ UIRED TO BE DELETED. 3.3 AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORT ED THE ORDER OF THE LOWER AUTHORITIES. 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD ALL TH E EXPENSES RELATED TO PRINTING AND STATIONARY ON THE BASIS OF PARTICULAR SPECIFICATION GIVEN BY THE ASSESSEE AND THE ASSESSEE HAD PAID VAT ON IT. THE BOARD CIRCULAR NO. 681 DATED 08/3/1994 REFERRED BY THE AR OF THE A SSESSEE IS SQUARELY APPLICABLE. ACCORDINGLY, SUCH PAYMENTS ARE NOT COVE RED U/S 194C OF THE ACT. THE HON'BLE SUPREME COURT DECISION IN THE CASE OF CIT-XVII, DELHI VS SILVER OAK LABORATORIES P. LTD. (SUPRA) IS ALSO SQUARELY APPLICABLE INCLUDING OTHER CITED CASES OF THE ASSESSEE. ALTERN ATIVELY, THE ASSESSEES CLAIM IS ALLOWABLE ON PAID BASIS AS RELIED UPON IN T HE CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) LTD. (SUPRA). THESE FAC TS HAD NOT BEEN CONTROVERTED BY THE LD DR DURING THE COURSE OF HEAR ING. THEREFORE, WE ALLOW THE ASSESSEES APPEAL ON THIS GROUND. ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 8 4. GROUND NO. 3 OF THE ASSESSEES APPEAL IS AGAINST DISALLOWANCE OF PROVISIONS OF GRATUITY OF RS. 8,72,000/-. THE LD AS SESSING OFFICER CLAIMED GRATUITY EXPENSES OF RS. 8.72 LACS DURING THE YEAR UNDER CONSIDERATION. THE LD ASSESSING OFFICER DISALLOWED THIS PAYMENT AS P RESCRIBED AUTHORITY HAD NOT APPROVED THIS FUND, WHICH HAS BEEN CONFIRMED BY THE LD CIT(A) ON SIMILAR FINDINGS. 4.1 THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THI S ISSUE HAS BEEN CONSIDERED BY THE HONBLE BENCH IN ASSESSEES OWN CA SE IN ITA NO. 1032/JP/2011 A.Y. 2008-09 ORDER DATED 14/08/2014 AN D ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE. THE FACTS AND CIR CUMSTANCES OF THE PRESENT CASE ARE IDENTICAL, THEREFORE, SAME MAY BE ALLOWED. 4.2 THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE FA CTS OF THE PRESENT CASE AND SIMILAR ADDITIONS WERE MADE IN A.Y. 2008-09 BY THE LD ASSESSING OFFICER, WHICH HAS BEEN DELETED BY THE CO ORDINATE BENCH IN ASSESSEES OWN BY RELYING ON THE HON'BLE SUPREME COU RT DECISION IN THE CASE OF CIT VS TEXTOOL CO. LTD. 263 CTR 257 (SC). THE A SSESSEE HAD ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 9 APPLIED BEFORE THE LD CIT, KOTA BUT APPROVAL OF THE PRESCRIBED AUTHORITY IS PENDING. THEREFORE, THERE IS NO LACK ON THE PART OF THE ASSESSEE. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED. 5. GROUND NO. 4 OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS. 15,32,714/- OUT OF PENSION, LEAVE S ALARY RESTRICTED BY THE LD CIT(A) AT RS. 9,24,253/-. THE LD ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE HAD TOTAL EXPENSES UNDER THIS HEAD AT RS. 58,90,244/-. AFTER CONSIDERING THE ASSESSEES REPLY, IT HAS BEEN HELD THAT OUT OF TOTAL LIABILITY OF RS. 83,57,029/-, THE ASSESSEE HAD DEPO SITED RS. 40.00 LACS DURING THE LAST YEAR. FURTHER TOTAL LIABILITY UP TO 31/3/2009 WAS CALCULATED AT RS. 58,90,244/- BY THE LIC. OUT OF TH IS, THE ASSESSEE HAD DEPOSITED RS. 43,57,520/- AS ON 31/3/2008 CLAIM MAD E BY THE ASSESSEE AT RS. 2,15,32,714/- HAS BEEN DISALLOWED BY THE ASSE SSING OFFICER, WHICH WAS PARTLY ALLOWED BY THE LD CIT(A) BY OBSERVING THAT OUT OF RS. 15,32,714/-, RS. 5,92,714/- WAS CLAIMED TO HAVE BEEN PAID ON 29/01/2009 AND RS. 6,08,461/- ON 28/07/2009. OBVIOU SLY AMOUNT OF RS. 5,92,714/- SHOULD HAVE ALREADY BEEN INCLUDED IN THE PAYMENT TILL 31/3/2009 AND CANNOT BE PART OF PROVISION AS ON 31/ 3/2009. RS. 6,08,461/- IS ALLOWABLE AS PAID BEFORE DUE DATE OF R ETURN. ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 10 5.1 THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE LD CIT(A) HAS WRONGLY UNDERSTOOD THE FACT THAT RS. 5,92,714/- WAS P AID ON 03/2/2009 AND CANNOT BE PART OF PROVISION AS ON 31/3/2009 BUT THIS AMOUNT WAS PAID OVER AND ABOVE RS. 43,57,530/-. HE HAS DRAWN OU R ATTENTION ON PAGE NO. 47 AND 48 OF PAPER BOOK. FURTHER THE LIC H AS CREDITED INTEREST OF RS. 2.40 LACS ON AMOUNT ALREADY PAID TO THE LIC, THEREFORE, HE PRAYED TO ALLOW THE RELIEF OF RS. 8,32,714/- OUT OF TOTAL D ISALLOWANCES SUSTAINED BY THE LD CIT(A) AT RS. 9,24,253/-. 5.2 AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORT ED THE ORDER OF THE LD CIT(A). 5.3 AFTER CONSIDERING THE FACTS OF THE CASE AND PAP ER BOOK SUBMITTED BY THE ASSESSEE, THE LD CIT(A) WRONGLY CONCLUDED THAT AMOUNT PAID ON 03/2/2009 HAD BEEN INCLUDED IN PROVISION. HOWEVER, A S PER PAPER BOOK SUBMITTED BY THE ASSESSEE, THIS AMOUNT OF RS. 5,92, 714/- WAS PAID OVER AND ABOVE RS. 43,57,530/-. THE LD DR HAS NOT CONTRO VERTED THE FACTS AND FIGURES, THEREFORE, WE ALLOW THE ASSESSEES APPEAL O N THIS GROUND. 6. GROUND NO. 5 OF THE ASSESSEES APPEAL IS AGAINST NOT ALLOWING THE PROVISION OF AGREEMENT ARREAR OF RS. 13,18,153/-. TH E LD ASSESSING OFFICER DISALLOWED OUT OF TOTAL SALARY CLAIMED AT RS . 1.00 CRORE BY THE ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 11 ASSESSEE IN P&L ACCOUNT. AS PAID BY THE ASSESSEE AT RS. 86,81,847/- AND BALANCE AMOUNT HAS BEEN SHOWN AS PROVISION, WHICH HAS BEEN CONFIRMED BY THE LD CIT(A) ON THE GROUND THAT WHICH REQUIRED F UTURE APPROVAL AND IT WAS CONTINGENT LIABILITY FOR THE CURRENT YEAR. THE FACT THAT SAME WAS PAID IN APRIL, 2012 ALSO FORMED THE FINDING, THEREF ORE, HE DISMISSED THE APPEAL. 6.1 THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THI S ISSUE HAS BEEN CONSIDERED BY THE HONBLE BENCH IN ITA NO. 1032/JP/ 2011 ORDER DATED 14/08/2014 FOR A.Y. 2008-09 IN ASSESSEES OWN CASE, WHEREIN IT HAS BEEN HELD THAT THIS SALARY HAS BEEN CRYSTALLIZED BY WAY OF AGREEMENT SETTLED BETWEEN THE ADMINISTRATION, EMPLOYEES AND UN ION. THE APPELLANT IS A DISTRICT LEVEL COOPERATIVE BANK, DO REVISION O F THE WAGES AND SALARIES OF THE STAFF AT STATE LEVEL, EFFECTIVE FOR PREVIOUS FIVE YEARS, THAT RESULTS INTO ARREARS OF SALARY. AFTER APPROVAL OF THE FINAN CE DEPARTMENT OF THE STATE GOVERNMENT, THE COOPERATIVE BANK MADE THE PAY MENT TO THE EMPLOYEES. AS PER ACCOUNTING STANDARD AS-1 AND AS-2 NOTIFIED BY THE CENTRAL GOVT., IT IS MANDATORY TO MAKE COMPLIANCE O F THESE ACCOUNTING STANDARDS. THEREFORE, THE SAME PROVISION HAS BEEN M ADE ON THE BASIS ACCOUNTING POLICY. HE FURTHER RELIED ON THE DECISIO N IN THE CASE OF CIT VS BHARAT HEAVY ELECTRICALS LIMITED 352 ITR 88 (DEL) A ND OTHERS WHEREIN ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 12 WAGES REVISION HAS BEEN ALLOWED. THE LD CIT(A) FAILED T O APPRECIATE THE FACT THAT THE LIABILITY OF THE ASSESSEE ARISEN FROM THE TERMS OF THE EMPLOYMENT RATHER THAN ANY APPROVAL AND ALSO NOT TA KEN INTO ACCOUNT THE FACT THAT EVEN IN SUBSEQUENT YEAR, FURTHER PROV ISION HAD BEEN MADE BASED ON INTERPRETATION AND CLAIM OF THE DIFFERENT EMPLOYEES INCLUDING RETIRED EMPLOYEES. THEREFORE, HE PRAYED TO DELETE TH E ADDITION CONFIRMED BY THE LD CIT(A). 6.2 AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORT ED THE ORDER OF THE LOWER AUTHORITIES. 6.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THIS I SSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-09, WHICH IS SQUARELY APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEAR UNDER CONSIDERATION. THEREFORE , BY RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH, WE ALLOW THE ASSESSEES APPEAL ON THIS GROUND. 7. GROUND NO. 7 OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE INTEREST ADDITION OF RS. 89,563/-. THE LD ASSESSING OFFICER HAS HELD THAT STATE BANK OF INDIA, JHALAWAR HAD SHOWN INTEREST IN T HE NAME OF ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 13 ASSESSEE AT RS. 24,79,563/- ON WHICH TDS HAS BEEN DED UCTED AT RS. 2,56,425/-. THE ASSESSEE HAS SHOWN INTEREST INCOME IN THE BOOKS OF ACCOUNT FROM SBI AT RS. 24,11,000/-, THEREFORE, THE ASSESSEE HAD DISCLOSED INTEREST INCOME LESS BY RS. 89,563/-, WHI CH WAS PARTLY ALLOWED BY THE LD CIT(A) BY OBSERVING THAT THE CREDIT OF TDS OF RS. 2,56,425/- HAD BEEN GIVEN ON INTEREST PAYMENT OF RS. 24,79,563 /-. HOWEVER, CORRECT FIGURE OF ADDITION, HE CALCULATED AT RS. 78 ,563/-. 7.1 THE ASSESSEE SUBMITTED THAT THERE WAS A DIFFERENC E IN DISCLOSING THE INTEREST BY RS. 78,563/-, WHICH HAS BEEN MADE P ART OF THE INCOME FOR A.Y. 2010-11. THE ADDITION MADE DURING THE YEAR UNDER CONSIDERATION IS WILL LEAD TO DOUBLE TAXATION. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. CIVIL APPEAL NO. 125 O F 2013 WHEREIN IT HAS BEEN HELD THAT IF RATES OF TAX ARE REMAINED SAME IN BOTH THE YEARS, NO POINT TO CONSIDER MINOR TAX EFFECT IN THE APPEALS. THEREFORE, HE PRAYED TO DELETE THE ADDITION. 7.2 THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD CIT(A). 7.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HAD ADMITTED THIS DIFFERENCE ON THE BASIS OF 26AS AND DISCLOSED THE DIFFERENCES OF ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 14 INTEREST INCOME OF RS. 78,563/- IN A.Y. 2010-11 AND THERE IS NO REVENUE LOSS IF THE SAME AMOUNT IS CONSIDERED IN A.Y. 2010- 11 BY THE ASSESSEE. THE HON'BLE SUPREME COURT DECISION IN THE CASE OF EX CEL INDUSTRIES (SUPRA) IS SQUARELY APPLICABLE. THEREFORE, WE DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). 8. GROUND NO. 7 IS AGAINST CONFIRMING THE ADDITION OF RS. 32,489/-. THE LD ASSESSING OFFICER DISALLOWED RS. 96,342/- ON A CCOUNT OF EXCESS CASH RESERVE. THIS AMOUNT IS NOT PAYABLE ON EXPENDI TURE. THE LD CIT(A) RESTRICTED THIS ADDITION OF RS. 34,489/- BY OBSERVI NG THAT AS PER BALANCE SHEET AS AN AMOUNT OF RS. 96,342/- HAD BEEN SHOWN AS EXCESS CASH RESERVE. THIS AMOUNT IS NOT PAYABLE ON EXPENDITURE. IT IS SEEN THAT RS. 63,853/- RELATED TO EARLIER YEAR, THEREFORE, REMAIN ING AMOUNT OF RS. 32,489/- HAD BEEN CONFIRMED BY HIM. 8.1 THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THI S ISSUE IS CONSIDERED BY THE HONBLE ITAT IN ASSESSEES OWN CASE IN A.Y. 2008-09 WHEREIN IT HAS BEEN HELD THAT RESERVE ACCOUNT IN BAL ANCE SHEET HAS BEEN CREATED ON THE LIABILITY SIDE. THE SAME REPRESENTS T HE EXCESS CASH FOUND AS PER BOOKS WHICH THE BANK IS REQUIRED TO REPAY TO THE LEGITIMATE PERSON ON A PROPER CLAIM. THUS, IT IS AN AMOUNT IN T RUST HELD BY THE ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 15 BANK, IT IS NOT CREDITED TO P&L ACCOUNT AND IS A BA LANCE SHEET ITEM. THE ASSESSEES EXPLANATION IS BONAFIDE. THE LD DR IS VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. BY RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINA TE BENCH ON IDENTICAL FACTS AND CIRCUMSTANCES, WE ALLOW THE ASSES SEES APPEAL ON SAME FINDING AND ON THIS GROUND. 9. GROUND NO. 8 OF THE ASSESSEES APPEAL IS CONSEQU ENTIAL TO THE ABOVE FINDING. 10. NOW WE TAKE THE REVENUES APPEAL. GROUND NO. 1 OF THE REVENUES APPEAL IS AGAINST DELETING THE DISALLOWANCE OF RS. 4 5,000/- ON ACCOUNT OF GANESH MAHOTASAVA. THE LD ASSESSING OFFICER SCRUTINI ZED THE DETAIL OF ADVERTISEMENT AND PUBLICITY EXPENSES. THE ASSESSEE H AD DEBITED RS. 45,000/- ON ACCOUNT OF GANESH MAHOTASAVA. AFTER CON SIDERING THE ASSESSEES REPLY, HE HELD THAT THIS EXPENSE IS NOT ALLOWABLE, WHICH HAS BEEN ALLOWED BY THE LD CIT(A) BY OBSERVING THAT CELEB RATING GANESH CHATURTHI DEFINITELY RESULTED INTO PUBLICITY OF BAN K. IT ALSO HELPED IN MOTIVATING STAFF, ACCORDINGLY, HE ALLOWED THE EXPENS ES. ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 16 10.1 THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 10.2 AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS R EITERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A). HE FURTHER ARGU ED THAT THE ASSESSEE IS A COOPERATIVE BANK AND HAS TO MAINTAIN RELATION WITH THE CUSTOMERS OF DIFFERENT GROUP OF PEOPLES. THESE PAYME NTS WERE MADE THROUGH CHEQUE TO GANESH MAHOTASAVA SOCIETY. THE CEL EBRATION OF GANESH MAHOTASAVA GIVES THE FEELING OF BELONGINGS A ND MOTIVATION TO THE STAFFS. THEREFORE, IT IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE BUSINESS PURPOSES. HE FURTHER RELIED ON THE DECISIO N IN THE CASE OF DCIT VS CARGOSOL, ITA NO. 4846/MUM/2010 WHEREIN PURCHASI NG OF GIFTS ETC. DURING THE FESTIVAL IS HELD ALLOWABLE AS BUSINESS EX PENDITURE. IN THE CASE OF COMMERCIAL AHMEDABAD MILLS CO. VS CIT 204 ITR 505 (GUJ) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT MAINTENANCE OF TEMPLE WITH THE HELP OF PUJARI, THE EXPENDITURE IS NOT A PERSONAL B ENEFIT OF ANY PERSON AND NOR OF A PURELY RELIGIOUS NATURE, THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 10.3 AFTER CONSIDERING BOTH SIDES AND FACTS OF THE CASE, THE LORD GANESHA IS THE GOD OF WEALTH AS CONSIDERING IN INDI AN METHODOLOGY. THE ASSESSEE ALSO DEALS IN BANKING. IT IS A FACT THAT A LL THE BANKS GENERALLY ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 17 PARTICIPATE IN GANESH MAHOTASAVA, WHICH MOTIVATES TH E EMPLOYEE AS WELL AS MAINTAIN GOOD RELATION WITH THE CUSTOMERS. THEREF ORE, IT IS AN ALLOWABLE EXPENSE U/S 37 OF THE ACT. THE CASE LAWS RE LIED UPON BY THE ASSESSEE IS ALSO APPLICABLE. ACCORDINGLY, ORDER OF THE LD CIT(A) ON THIS GROUND IS CONFIRMED. 11. GROUND NO. 2 OF THE REVENUES APPEAL IS AGAINST DELETING THE ADDITION OF RS. 94,84,714/- ON ACCOUNT OF LEAVE SAL ARY ENCASHMENT FUND U/S 43B(F) OF THE ACT. THE LD ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE HAD SHOWN RS. 94,84,740/- AS LEAVE SALARY E NCASHMENT FUND UNDER FUNDS AND RESERVE IN THE BALANCE SHEET AS A GAINST RS. NIL SHOWN IN THE ASSESSMENT YEAR 2008-09. THE LD ASSESSIN G OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE . IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT PENSION LEAVE SAL ARY ENCASHMENT FUND OF RS. 94,84,717/- WAS THE BALANCE REMAINED WITH THE LIC. THERE WAS A DIFFERENCE OF RS. 63,195/-, FOR WHICH CERTIFICATE RE CEIVED ON 10/7/2009 AND SOME DIFFERENCES WAS ON ACCOUNT OF INTEREST CALC ULATION. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HELD THAT AS PER LIC CERTIFICATE UP TO 31/3/2009, AN AMOUNT OF RS. 9 4,47,879/- WAS LYING WITH THE LIC. HOWEVER, AS PER BALANCE SHEET OF THE A SSESSEE, THE AMOUNT SHOWN AS ON 01/4/2008 UNDER THIS HEAD WAS NIL. THE ASSESSEE ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 18 HAD NOT GIVEN THE DETAILS OF THIS PAYMENT MADE TO L IC DURING THE YEAR UNDER CONSIDERATION. THEREFORE, HE MADE ADDITION OF RS. 94,84,714/-, WHICH HAS BEEN DELETED BY THE LD CIT(A) BY CONSIDERIN G THE ASSESSEES REPLY AS UNDER:- VKIDS I= EKAD TSDS,LCH@QK@IZ- ,OA DK@2009&10@1800 FNUAKD 03-06-2009 DS LACA/K ESA YS[K GS FD VKIDKS I WOZ ESA YS[K GS FD VKIDKS IWOZ ESA HKSTS X;S CSYSUL IZEK.K I= DS FY , [KSN GSA VKIDKS LAKKSF/KR IZEK.K I= FHKTOK;K TK JGK GS FOOJ .K FUEUKUQLKJ GS %& VKJFHKAX KS'K :I;S 8545616@& O'KZ DS NKSJKU TEK DJOKBZ XBZ JKFK :I;S 525290@& O'KZ DS NKSJKU HKQXRKU FD;S X;S NKOS :I;S 288930@& O'KZ DS NKSJKU VFTZR C;KT :I;S 765903@& 31-03-2009 DKS Q.M JKFK :I;S 9547879@& AS PER LIC CERTIFICATE, UP TO 31/03/2009, AN AMOUNT OF RS. 95,47,879/- WAS LYING WITH LIC. HOWEVER, AS PER BALANCE SHEET OF THE ASSESSEE THE AMOUNT SHOWN AS O N 01/4/2008 UNDER THIS HEAD IS NIL. THE ASSESSEE HAS N OT GIVEN THE DETAILS OF THIS PAYMENT MADE TO THE LIC D URING THE YEAR UNDER CONSIDERATION AND DETAILS OF DEPOSIT S MADE DURING THE EARLIER YEARS. THEREFORE, THE AMOUNT SHOWN IN THE BALANCE SHEET AT RS. 94,84,714/- AS LEAVE SALAR Y ENCASHMENT IS ADDED TO THE INCOME OF THE ASSESSEE U /S 43B(F). THE LD CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSES SEE AND FOUND IT CLERICAL MISTAKE AND ACCORDINGLY, HE ALLOWED THE AP PEAL. ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 19 11.1 NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. AT TH E OUTSET, THE LD AR OF THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFO RE THE LD CIT(A). THE LD ASSESSING OFFICER HAD MADE ADDITION BY MAKING DISALLOWANCE U/S 43B(F) OF THE ACT BY TAKING AMOUNT FROM THE BALANCE SHEET, WHICH IS GROSSLY INCORRECT AND WITHOUT EVEN GOING THROUGH HIS OWN ACTION ON THE SAME ISSUE FOR THE EXPENDITURE CLAIMED IN THE P&L A CCOUNT. HE FURTHER CLARIFIED THAT THIS ISSUE BY DRAWING OUR ATTENTION O N PAGE NOS. 66 AND 67 OF THE PAPER BOOK AND PAGE NO. 57 TO 65 IS CLERICAL MISTAKE, THIS BIFURCATION HAS NOT BEEN REFLECTED IN THE BALANCE S HEET, WHICH INCLUDES LEAVE SALARY ENCASHMENT AND GRATUITY FOR WHICH NECES SARY COPY OF RETURN HAS BEEN PLACED ON RECORD IN PAPER BOOK, THEREFORE, HE PRAYED TO UPHOLD THE ORDER OF THE LD CIT(A). 11.2 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AR OF THE ASSESSEE HAS CLARIFIED IN DETAIL THAT IT IS A CLERICAL MISTAKE B EFORE THE LD CIT(A), WHO HAD VERIFIED FROM THE RECORD, WHICH HAS ALSO BEEN CL ARIFIED DURING THE COURSE OF HEARING BY THE LD AR, WHICH HAS NOT BEEN C ONTROVERTED BY THE LD DR. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD C IT(A). ITA 515 & 584/JP/2014_ JHALAWAR KENDRIYA SAHAKARI BANK LTD., VS. JCIT 20 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/05/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 24 TH MAY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- JHALAWAR KENDRIYA SAHAKARI BANK LTD., JHALAWAR. 2. IZR;FKHZ @ THE RESPONDENT- THE J.C.I.T., RANGE-1, KOTA. 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. 515 & 584/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR