RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORP. LTD., Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, Jaipur

ITA 548/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6265 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 24-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: DILEEP SHIVPURI
• Keywords: Capital asset; Depreciation; Competent authority; Revenue expenditure
• Section: 43B; 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 FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 548/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPORATION LTD. SETU BHAWAN, JHALANA DOONGRI, JAIPUR. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCR 9650 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 182/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 THE DCIT, CIRCLE-6, JAIPUR. CUKE VS. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPORATION LTD. SETU BHAWAN, JHALANA DOONGRI, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCR 9650 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI DILEEP SHIVPURI (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 18/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 24/07/2018 VKNS'K@ ORDER ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 2 PER: VIJAY PAL RAO, J.M. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 30.11.2017 OF CIT(A), JAIPUR FOR THE ASSESSMENT YEA R 2014-15. 2. AT THE OUTSET OF THE HEARING, THE BENCH OBSERVED THAT THE APPEAL FILED BY THE ASSESSEE IS LATE BY 64 DAYS FOR WHICH THE LD. AR OF THE ASSESSEE FILED THE APPLICATION FOR CONDONATION OF D ELAY WITH FOLLOWING PRAYERS. 1. THAT THE IMPUGNED ORDER OF THE CIT(A)-II, JAIPU R WAS RECEIVED BY THE APPELLANT ON 14.12.2018. HENCE, AN APPEAL IN THIS CASE HAD TO BE FILED BY OR ON 13.02.2018. 2. THAT THERE AS CHANGE OF AUTHORIZED REPRESENTATIV E TO REPRESENT THE APPELLANT BEFORE THE HONBLE ITAT. 3. THAT THE APPELLANT BEING A CORPORATION OF THE GO VERNMENT OF RAJASTHAN THERE ARE MULTIPLE LAYERS OF AUTHORITIES FOR EVERY DECISION, AND IT TO CONSIDERABLE TIME FOR THE CHANG E IN A/R TO BE APPROVED BY THE COMPETENT AUTHORITY. 4. THAT IT WAS THE NEW A/R WHO POINTED OUT THAT APP EAL NEEDS TO BE FILED ON TWO ISSUES WHERE ADDITIONS MADE BY THE ASSESSING OFFICER HAD BEEN CONFIRMED BY THE CIT(A). IT WAS ON LY THEN THAT NECESSARY APPROVALS WERE TAKEN TO FILE SEPARATE APP EAL. 5. THAT THE COURTS OF THE COUNTRY HAVE TAKEN A CONS ISTENT VIEW THAT APPELLANT AUTHORITIES SHOULD BE LENIENT IN CON DONING DELAY IN FILING OF APPEAL IN CASE WHERE GOVERNMENT ENTITES A RE INVOLVED FOR IT IS THE PURPOSE OF APPELLANT AUTHORITIES TO DISPE NSE JUSTICE AND NOT TO STAND ON TECHNICALITIES. HENCE, IT IS REQUESTED THAT DELAY OF 70 DAYS IN FIL ING OF APPEAL MY KINDLY BE CONDONED, AND THE APPEAL HEARD ON MERITS. ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 3 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE NARRATED BY THE ASSESSEE, IT IS OBSERVED THAT THERE WAS SUFFICIENT CAUSE IN PREVENTING THE ASSESS EE TO FILE THE APPEAL TIME. HENCE, THE DELAY IN FILING THE APPEAL BY THE ASSESSEE IS CONDONED. 4. FIRST, WE TAKE UP ASSESSEES APPEAL IN ITA NO. 5 48/JP/2018. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- GROUND NO. 1: THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS I N CONFIRMING AN ADDITION OF RS. 2,00,00,000/- FOR CONSTRUCTION O F GUEST HOUSE IN MUMBAI. GROUND NO. 2: THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS I N CONFIRMING PART DISALLOWANCE OF RS. 3,03,00,000/- BEING DEDUCT ION CLAIMED U/S 80IA OF THE INCOME-TAX ACT. GROUND NO.3: THAT THE APPELLANT CRAVES INDULGENCE TO ADD, MODIFY OR AMEND ANY GROUND OF APPEAL ON OR BEFORE THE HEARING. 5. GROUND NO. 1 IS REGARDING DISALLOWANCE OF CLAIM AT RS. 2,00,00,000/- ON ACCOUNT OF CONTRIBUTION FOR CONSTR UCTION OF STATE GOVERNMENT GUEST HOUSE IN MUMBAI. 6. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR A ND CONSIDERED THAT THE ASSESSEE HAS CONTRIBUTED RS. 2,00,00,000/- FOR CONSTRUCTION OF ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 4 THE STATE GOVERNMENT GUEST HOUSE AT MUMBAI AND THE ASSESSEE WILL GET THE BENEFIT OF ACCOMMODATION FACILITY IN THE MUMBAI . THE LD. AR HAS SUBMITTED THAT THE STATE GOVERNMENT OF RAJASTHAN HA S ALLOWED THE REBATE OF 50% IN THE TARIFF OF GUEST HOUSE FOR STAY OF THE OFFICERS AND THE EMPLOYEES OF THE ASSESSEE. HE HAS FILED A COPY OF ORDER DATED 24.10.2017 OF STATE GOVERNMENT. THE LD. AR HAS FURT HER SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL DATED 10.04.2018 IN CASE OF M/S RAJASTHAN STATE INDUSTRIAL DEVELOPMENT & INVESTMENT CORP. LTD. VS. ACIT IN ITA NO. 380& 381/JP/2017 . 7. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE CONTRIBUTI ON TO THE STATE GOVERNMENT GUEST HOUSE IS ONLY AN APPLICATION OF IN COME AND NOT ALLOWABLE REVENUE EXPENDITURE. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF M/S RAJASTHAN STATE INDUST RIAL DEVELOPMENT & INVESTMENT CORP. LTD. VS. ACIT (SUPRA) HAS CONSIDER ED AN IDENTICAL ISSUE IN PARAS 2.5 & 2.6 AS UNDER:- ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 5 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS, AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISS UE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE RECENT DECISION OF TH IS BENCH IN ASSESSEES OWN CASE FOR AY 2011-12 (IN ITA NO. 93/J P/2015 DATED 23.02.2018) AND THE RELEVANT FINDINGS THEREIN ARE R EPRODUCED AS UNDER: 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 WHILE CONSIDERING AN ISSUE OF THE EXPENDITURE INCUR RED TOWARDS THE CONTRIBUTION MADE TO THE CONSTRUCTION OF GUEST HOUSE IN DELHI VIDE ORDER DATED 21.08.2007 IN ITA NO. 324/JP2006 H AS HELD IN PARA 12 AS UNDER:- 12. CONSIDERING THE ABOVE SUBMISSIONS, WE ARE OF T HE VIEW THAT UNDISPUTEDLY ASSESSEE WAS NOT THE OWNER OF THE FOUR ROOMS IN THE GUEST HOUSE OF THE STATE GOVERNMENT AT CHANAKYAPURI IN NEW DELHI AND THE ASSESSEE WAS ONLY ENTITLED TO USE THO SE FOUR ROOMS ALLOTTED TO IT FOR STAYING OF ITS OFFICIALS VISITIN G DELHI. ASSESSEE HAS NO RIGHT TO SELL, ALTER OR AMEND THOSE ALLOTTED ROO M. THE GUEST HOUSE WAS UNDISPUTED NEITHER PURCHASED NOR CONSTRUC TED BY THE ASSESSEE. THE MAINTENANCE OF THESE ROOMS WERE ALSO IN THE HANDS OF THE STATE GOVERNMENT WHO HAS BEEN CHARGING THE SAME ON ANNUAL BASIS FROM THE ASSESSEE. THUS IN A SENSE ONLY THE FACILITIES TO USE THOSE ALLOTTED FOUR ROOMS TO THE ASSESSEE WERE PURCHASED ON A LUMP-SUM PAYMENT. IT IS AN ESTABLISH ED POSITION OF LAW THAT IN A CASE OF OWNERSHIP AGAINST IMMOVABL E PROPERTY, THE UNCONDITIONAL INTEREST IN ABSOLUTE TERM WITH FR EEDOM TO SELL, ALIENATE ECT. IS TRANSFERRED BY THE SELLER TO THE P URCHASER, WHICH IS ADMITTEDLY NOT THE CASE OVER HERE. UNDER THESE CIRC UMSTANCES WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY COM E TO THE CONCLUSION THAT NO CAPITAL ASSETS HAVE BEEN CREATED TO THE ASSESSEE BUT ONLY A PRIVILEGE OR A RESERVATION OF F OUR ROOMS WERE MADE ON PERMANENT BASIS TO THE ASSESSEE. THEREFORE, THE PROVISIONS OF GUEST HOUSE AT DELHI WAS IN THE NORMA L COURSE OF ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 6 BUSINESS AND EXPENDITURE INCIDENTAL TO IT IS OF REV ENUE NATURE. THE LD. CIT(A) HAS RIGHTLY OBSERVED FURTHER THAT TH E AO HAS NOT APPRECIATED THE FACTS PROPERLY THAT TOTAL EXPENDITU RE OF RS. 40,00,000/- WAS DEFERRED IN FIVE EQUAL INSTALMENTS AND ONLY RS. 8,00,000/- WAS DEBITED IN A.Y. 2003-04. THUS, THE E NTIRE ADDITION OF RS. 40,00,000/- NEED TO BE DELETED AND THE CLAIM OF DEPRECIATION ALLOWED BY THE AO AT RS. 2,00,000/- IS ALSO TO BE ADDED BACK IN THE COMPUTATION OF INCOME AS PER THE FIRST APPELLATE ORDER. WE CONCUR WITH THE VIEW OF LD. CIT (A) WHICH ALSO FINDS SUPPORT FROM THE DECISIONS OF HONBLE DELHI H IGH COURT IN THE CASE OF NESET HOLDINGS (P) LTD. V/S CIT(SUPRA) WHEREIN ONE TIME PAYMENT WAS ALLOWED AS REVENUE EXPENDITURE WH ERE SUCH PAYMENT IS MEANT FOR REDUCING THE OVERALL REVENUE E XPENDITURE OF THE ASSESSEE. THE GUEST HOUSE IN THE PRESENT CASE W AS REQUIRED ONLY FOR RUNNING THE BUSINESS AND WORKING OF THE AS SESSEE FOR BETTER INTER-ACTION WITH THE GOVERNMENT OF INDIA AN D VARIOUS FINANCIAL ORGANIZATIONS. THE FIRST APPELLATE ORDER BEING COMPREHENSIVE AND REASONS ONE, WE ARE NOT INCLINED TO INTERFERE THEREWITH. THE SAME IS UPHELD. THE GROUND NO. 2 IS THUS REJECTED. WE FURTHER NOTE THAT AS PER LETTER DATED 24.10.2017 THE GOVERNMENT OF RAJASTHAN HAS ALLOWED THE ASSESSEE A REBATE OF 75% OF TARIFF OF THE ROOM FOR STAYING OF THE EMPLOY EES/OFFICERS OF THE ASSESSEE. THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF RAJASTHAN RENEWAL ENERGY CORPORATION LTD. VS. DCIT VIDE ORDER DATED 18.08.2017 IN ITA NO. 159& 202/JP/2015 AND OT HERS WHILE CONSIDERING AN IDENTICAL ISSUE HAS HELD IN PARA 55 AS UNDER:- 55. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSU ED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT DISPUTED T HAT THE CONTRIBUTION TOWARDS CONSTRUCTION OF RAJASTHAN BHAW AN HAS BEEN MADE AS DIRECTED AND AUTHORIZED BY THE STATE GOVERN MENT, BEING THE OWNER AND SHAREHOLDER OF THE ASSESSEE COMPANY. THE QUESTION IS THEREFORE NOT ABOUT THE AUTHORIZATION B EFORE INCURRENCE OF THE SAID EXPENDITURE. THE QUESTION I S WHETHER THE ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 7 SAID EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE COMPANY FOR THE PURPOSES OF ITS BUSINESS OR NOT. THE ONUS IS O N THE ASSESSEE COMPANY TO ESTABLISH THE SAID FACT. THE LD AR HAS SUBMITTED THAT THE ASSESSEE COMPANY HAS WRITTEN TO THE GOVERNMENT OF RAJASTHAN TO PROVIDE ACCOMMODATION FACILITIES IN TH E RAJASTHAN BHAWAN TO ITS OFFICERS ON THEIR VISIT TO MUMBAI, HO WEVER, THERE IS NOTHING ON RECORD TO SUPPORT THE SAID CONTENTION. WE ARE ACCORDINGLY SETTING ASIDE THE MATTER TO THE FILE OF THE AO TO EXAMINE THE SAID CONTENTION AND THE EXAMINE THE MAT TER A FRESH. IN THE RESULT, THE GROUND OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. THUS, THE TRIBUNAL BY CONSIDERING THE ACCOMMODATION FACILITY IN THE GUEST HOUSE AS RELEVANT FACTOR SET ASIDE THE IS SUE TO THE RECORD OF THE AO TO EXAMINE THE ACCOMMODATION FACIL ITY AVAILABLE TO THE ASSESSEE IN RAJASTHAN BHAWAN AT MUMBAI. 36. SINCE THIS LETTER DATED 24.10.2017 WAS NOT AVAI LABLE BEFORE THE COORDINATE BENCH IN CASE OF RAJASTHAN RENEWAL E NERGY CORPORATION LTD. (SUPRA) THEREFORE, THE AO WAS ASKE D TO EXAMINE THE FACT. HOWEVER, IN VIEW OF THE SAID LETTER DATED 24.10.2017 IT IS CLEAR THAT THE ASSESSEE GOT THE REBATE OF 75% AS WE LL AS THE RIGHT TO USE THE ACCOMMODATION BY ITS OFFICERS/EMPLOYEES VISITING AT MUMBAI. ACCORDINGLY, IN VIEW OF THE EARLIER DECISIO N OF THIS TRIBUNAL IN ASSESSEES OWN CASE AS WELL AS IN VIEW OF THE FACT THAT THE ASSESSEE HAS RECEIVED THE BENEFIT IN THE SHAPE OF ACCOMMODATION AGAINST THE SAID EXPENDITURE FOR CONS TRUCTION OF RAJASTHAN HOUSE WE HOLD THAT THE CLAIM OF THE ASSES SEE IS AN ALLOWABLE EXPENDITURE U/S 37(1) OF THE ACT. 2.6 UNDISPUTEDLY, THERE ARE NO CHANGES IN THE FACT S AND CIRCUMSTANCES OF THE CASE. FOLLOWING OUR EARLIER D ECISION REFERRED SUPRA IN ASSESSEES OWN CASE FOR AY 2011-12, THE GR OUND NO.1 OF ASSESSEES APPEAL IS ALLOWED. ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 8 THUS, IT IS CLEAR THAT THIS TRIBUNAL HAS BEEN TAKIN G A CONSISTENT VIEW ON THIS ISSUE AND WHEN THE ASSESSEE RECEIVED BENEFIT I N THE SHAPE OF ACCOMMODATION AT CONCESSIONAL RATE FOR STAY OF ITS OFFICERS AND EMPLOYEES IN THE STATE GUEST HOUSE, THE SAID CONTRI BUTION FOR CONSTRUCTION OF THE RAJASTHAN GUEST HOUSE IS ALLOWA BLE CLAIM U/S 37(1) OF THE ACT. FOLLOWING THE EARLIER ORDER OF THIS TRI BUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . THE ADDITION MADE BY THE AO IS DELETED. 9. GROUND NO. 2 IS REGARDING DISALLOWANCE OF CLAIM U/S 80IA OF THE ACT. 10. WE HAVE HEARD THE LD. AR AS WELL AS THE LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE N OTE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13 VIDE ORDER DATED 10.04.2017 IN CASE OF ACIT VS. M/S RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUC TION CORP. LTD. IN ITA NO. 123/JP2017 IN PARA 6 AS UNDER:- 6. GROUND NO. 3, IS AGAINST RESTRICTING THE DISALL OWANCE OF U/S 80IA OF RS. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN S UBMISSIONS. LD. DEPARTMENTAL REPRESENTATIVES IS CONCEDED THE FA CTS, HOWEVER HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 9 6.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN PERTAINING TO THE ASSESSMENT YEAR 2011- 12 IN ITA NO. 558/JP/2016, DECIDED THE ISSUE BY OBS ERVING AS UNDER:- 8.2 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE COMPANY HAS CLAIMED ESTABLISHMEN T EXPENSES UNDER THE HEAD PAYMENT TO AND PROVISION FOR EMPLOY EES AS PER SCHEDULE I AT RS. 32,68,44,701/- AND ADMINISTRAT IVE EXPENSES AT RS. 6,05,47,431/- AS PER SCHEDULE J ANNEXED TO THE PROFIT & LOSS ACCOUNT. TOTAL OF THESE EXPENSES COMES TO RS. 38,73,92,132/-. THE AO FURTHER OBSERVED THAT NONE OF THE EXPENSES WERE CHARGED TOWARDS INCOME DISCLOSED FROM VARIOUS TOLL ROAD PROJECTS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA OF THE ACT. HE OBSERVED THAT ASSESSEE HAS CLAIMED TOTAL 8 TOLL ROAD/BRIDGE PROJECTS ELIGIBLE FOR DEDUCTION U/S 80I A OF THE ACT WITHIN THE MEANING OF SECTION 80IA(4)(I) OF THE ACT FOR DEVELOPING, OPERATING AND MAINTAINING OF INFRASTRUC TURE FACILITY I.E. ROAD/BRIDGE. THESE 8 PROJECTS ARE : (I) BIKANER BY PASS, (II) HANUMANGARH-SURATGARH ROAD, (III) HANUMANGARH- SHRIGANGANAGAR ROAD, (IV) MASSI BRIDGE, (V) CHALA NEEMA KA THANA-KOTPUTLI ROAD, (VI) CHOMU-AJITGARH SHAHPURA R OAD, (VII) CHALA NEEM KA THANA-KOTPUTLI ROAD (IMPROVEMENT) (VI II) MANGALWAR NIMBAHERA ROAD. OUT OF THESE, TWO PROJEC TS BIKANER BYPASS & CHOMU- AJITGARH-SHAHPURA ROAD HAVE INCURRE D LOSSES. ON BALANCE 6 PROJECTS ASSESSEE HAS CLAIMED DEDUCTIO N U/S 80IA OF THE ACT TO THE TUNE OF RS. 8,20,34,909/-. AS TH E ESTABLISHMENT AND ADMINISTRATIVE EXPENSE WERE UTILIZED FOR THE EN TIRE BUSINESS ACTIVITIES OF THE COMPANY WHICH INCLUDES ROAD & BRI DGE PROJECTS; AS SUCH THE ASSESSEE WAS ASKED TO SHOW CAUSE AND EX PLAIN AS TO WHY THE ESTABLISHMENT AND ADMINISTRATIVE EXPENSE OF RS. 38,73,92,132/- SHOULD NOT BE ALLOCATE PROPORTIONATE LY TO ROAD/BRIDGE PROJECTS IN PROPORTION TO THEIR INCOME OF RS. ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 10 23,00,24,830/- WITH TOTAL INCOME OF RS. 64,78,66,50 0/- THE ASSESSEE, IN RESPONSE TO THIS QUERY, MADE A DETAILE D SUBMISSION. HOWEVER, THE SUBMISSIONS OF THE ASSESSEE WERE NOT F OUND ACCEPTABLE BY THE AO. THE AO, THEREFORE, BY RELYIN G ON THE PROVISIONS OF SECTION 80IA(5) ALLOCATED THE DIRECT EXPENSES TOWARDS ELIGIBLE UNITS AS WELL. THE AO FURTHER OBS ERVED THAT IT IS CLEAR THAT MANY EXPENSES OF COMMON NATURE I.E. HEAD OFFICE AND OTHER DAY-TO-DAY MANAGEMENT AND SUPERVISION EXPENSE S HAVE NOT BEEN APPORTIONED AMONGST THE UNIT CLAIMING DEDU CTION U/S 80IA OF THE ACT. THE ASSESSEE HAS CONSIDERED ONLY D IRECT OPERATION AND MAINTENANCE EXPENSES FOR WORKING OUT THE PROFITS OF ROAD AND BRIDGE PROJECT FOR CLAIMING DEDUCTION U /S 80IA, AS IF THESE PROJECTS WERE AUTOMATICALLY SET UP AND RUNNIN G WITHOUT ANY STRATEGIC PLANNING, MANAGEMENT, DIRECTIONS, SUPERVI SION, MARKETING SUPPORT, REGULAR CONTRACT AWARDING, WORKS TENDERING, CONTROL ETC. BY THE HEAD OFFICE/BRANCH OFFICES. TH E ADMINISTRATIVE, HEAD OFFICE AND OTHER EXPENSES HAVE A DIRECT NEXUS WITH THE RUNNING OF ROAD/BRIDGE PROJECTS OF THE ASSESSEE SIT UATED AT VARIOUS PLACES AND, THEREFORE, THE SAME ARE DEDUCTI BLE ON PROPORTIONATE BASIS IN COMPUTING THE PROFITS AND GA INS FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF SUB-SECTION (1 ) OF SEC. 80IA OF THE ACT. THEREFORE, THE AO OBSERVED THAT A SUM OF RS. 13,75,43,459/- IS REQUIRED TO BE APPORTIONED TO 80I A UNITS, ACCORDINGLY THIS WILL BE DEDUCTED FOR THE PURPOSE O F WORKING OUT DEDUCTION UNDER SECTION 80IA OF THE ACT. THUS THE AO REDUCED THE ALLOWABLE DEDUCTION ACCORDINGLY. HOWEVER, THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, RESTRICTED THE DISALLOWANCE TO RS. 6,98,93,301/- AGAINST RS. 8,20, 34,909/-. THE LD. CIT (A) BY DOING SO HAS OBSERVED AS UNDER:- 5.5. THE APPELLANT HAS STATED THAT WHILE APPORTIO NING THE EXPENDITURE, THE ASSESSING OFFICER HAS WRONGLY TAKE N THE TOTAL TURNOVER AS RS. 64,78,66,570/- WHEREAS THE CORRECT TURNOVER IS RS. 4,38,13,34,652/-, REFLECTED IN THE INNER COLUMN OF SCHEDULE-G OF THE FINAL ACCOUNTS RELATING TO OPERATING RECEIPT S. IF THE INNER COLUMN OF SCHEDULE-G PERTAINING TO OPERATING RECEIP TS IS TOTALED, ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 11 THE GROSS TURNOVER AMOUNTS TO RS. 69,89,85,491/- AS AGAINST RS. 4,38,13,34,652/- CLAIMED BY THE APPELLANT. 5.6. THE APPELLANT HAS STATED THAT THE WORK OF BOT PROJECTS IS HANDLED BY ONLY FIVE DIVISIONS OF THE APPELLANT AND THE REMAINING 26 DIVISIONS DO NOT UNDERTAKE ANY WORK RELATING TO BOT PROJECTS. THEREFORE, PAYMENT TO AND PROVISION FOR EMPLOYEES O F THESE FIVE DIVISIONS AND THE HEAD OFFICE SHOULD ONLY BE TAKEN. THIS CONTENTIONS OF THE APPELLANT IS CORRECT AND THIS EX PENDITURE RELATABLE TO BOT PROJECTS IS TAKEN AS RS. 16,98,40, 588/-. 5.7. THE APPELLANT HAS STATED THAT ADMINISTRATIVE EXPENSES INCURRED AT THE HEAD OFFICE OF RS. 6,05,47,731/- DO NOT RELATED TO BOT PROJECTS. LOOKING TO THE NATURE OF ADMINISTRAT IVE EXPENSES, THIS CONTENTIONS OF THE APPELLANT IS WITHOUT ANY BA SIS AND CANNOT BE ACCEPTED. THE ADMINISTRATIVE EXPENSES WHICH NEE D TO BE APPORTIONED TO THE BOT PROJECTS IS RS. 6,05,47,731/ - - RS. 1,80,00,500/- = RS. 4,25,46,931/- (EXPENDITURE IS R S. 1,80,00,500/- HAS BEEN DISALLOWED BY THE APPELLANT IN THE COMPUTATION OF INCOME). THEREFORE, THE TOTAL EXPEN DITURE WHICH NEEDS TO BE APPORTIONED TO THE BOT PROJECTS IS RS. 21,23,87,519/- (RS. 16,98,40,588 + RS. 4,25,46,931/ -). 5.8. IN THIS WAY, DISALLOWANCE UNDER SECTION 80IA(4 ) WILL BE COMPUTED AS UNDER:- RS. 21,23,87,519 X RS. 23,00,24,830/ RS. 69,89,85,4 91= RS. 6,98,93,301/-. THE DISALLOWANCE U/S 80IA OF RS. 8,20,34,909/- MAD E BY THE ASSESSING OFFICER IS RESTRICTED TO THE ABOVE AMOUNT OF RS. 6,98,93,301/-. GROUND 4.1 IS PARTLY ALLOWED. THE ASSESSEE HAS DEMONSTRATED THAT THE AUTHORITIES BELOW HAVE TAKEN INCORRECT FIGURE OF TURNOVER. ANOTHER CONTEN TION OF THE ASSESSEE IS THAT THE AMOUNT RELATED TO HEAD OFFICE IS ALREADY ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 12 APPORTIONED AND, THEREFORE, THERE WAS NO NEED FOR A PPORTIONMENT OF THE SAME. WE FIND MERIT IN THE CONTENTION OF TH E LD. COUNSEL FOR THE ASSESSEE. THEREFORE, THE GROUND RAISED IN THE APPEAL OF THE REVENUE IS DISMISSED. FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL WE ALL OWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IA OF THE ACT 11. NOW, WE TAKE UP REVENUES APPEAL IN ITA NO. 18 2/JP/2018. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- (I) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE AD DITION OF RS. 69,32,000/- MADE BY THE A.O. BY DISALLOWING OF CONT RIBUTION TO STATE RENEWAL FUND DESPITE THE FACT THAT IT WAS APP LICATION OF INCOME AND NOT EXPENDITURE INCURRED FOR BUSINESS EX PEDIENCY. (II) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DI SALLOWANCE OF RS. 29,65,065/- MADE BY THE A.O. FOR DEPOSITING THE EMP LOYEES CONSTRUCTION TO PF & ESI BEYOND THE PRESCRIBED TIME LIMITE PROVIDED IN RESPECTIVE ACTS. (III) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT EM PLOYEES CONTRIBUTION TO PF &ESI ARE GOVERNED BY THE PROVISI ON OF SECTION 43B AND NOT BY SECTION 36(1)(VA) R.W.S. 2(24)(X) OF THE I. T. ACT. (IV) THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 12. GROUND NO. (I) IS REGARDING DISALLOWANCE MADE B Y THE AO ON ACCOUNT OF CONTRIBUTION TO STATE RENEWAL FUND WHICH WAS ALLOWED BY THE LD. CIT(A). ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 13 13. WE HAVE HEARD THE LD. DR AS WELL AS THE LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE N OTE THAT THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012 -13 IN ITA NO. 123/JP/2017 ORDER DATED 10.04.2017 HAS CONSIDERED T HIS ISSUE IN PARA 4 AS UNDER:- 4. GROUND NO. 1, IS AGAINST DELETION OF DISALLOWANC E OF RS. 20 LAKHS MADE ON ACCOUNT OF CONTRIBUTION TO STATE RENEWAL FU NDS. WE FIND THAT THE SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT RENDER ED IN THE CASE OF CIT VS. RAJASTHAN STATE SEEDS CORPORATION LTD. 386 ITR 267. RESPECTIVELY FOLLOWING THE JUDGMENT OF THE HIGH COU RT, WE DO NOT SEE ANY REASON TO INTERFERE INTO THE ORDER OF THE LD. C IT (A), THEREFORE, SAME IS HEREBY AFFIRMED. THEREFORE, THE GROUND RA ISED BY THE REVENUE IS DISMISSED. THUS, IT IS CLEAR THAT THE ISSUE IS COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS RAJASTH AN STATE SEEDS CORPORATION LTD. 386 ITR 267. HENCE, BY FOLLOWING D ECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS RAJASTH AN STATE SEED CORPORATION LTD. (SUPRA) AS WELL AS THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD . CIT(A) QUA THIS ISSUE. ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 14 14. GROUND NOS. (II) &(III) ARE REGARDING DISALLOWA NCE MADE BY THE AO ON ACCOUNT OF CONTRIBUTION TO PF & ESI BEYOND THE PRESCRIBED TIME LIMIT PROVIDED IN THE RESPECTIVE ACTS WHICH WAS DELETED B Y THE LD. CIT(A). 15. WE HAVE HEARD THE LD. DR AS WELL AS THE LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE N OTE THAT THIS ISSUE IS NO LONGER RES INTEGRA AS SETTLED BY THE SERIES OF D ECISIONS OF HONBLE JURISDICTIONAL HIGH COURT INCLUDING THE DECISIONS I N CASE OF JAIPUR VIDHYUT VITHRAN NIGAM LTD, 265 CTR 62 (RAJ.) AS WEL L AS IN CASE OF CIT VS. STATE BANK OF BIKANER & JAIPUR (2014) 99 DTR 131. ACCORDI NGLY, IN VIEW OF THE BINDING PRECEDENT OF HONBLE JURISDICTI ONAL HIGH COURT, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/07/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24/07/2018. ITA NO.548 & 182/JP/2018 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION COR. LTD. VS. ACIT 15 * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPORATION LTD., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT/ DCIT, CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 548 &182/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR