Addl. CIT, Special Range-7, New Delhi V. PEC Ltd., New Delhi

ITA 6446/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2800 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 23-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL GANDHI SENIOR
• Assessee Lawyers: DAMANPREET SINGH
• Keywords: Business expenditure; Set aside; FORM 26AS
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6446/DEL./2017 (ASSESSMENT YEAR : 2013-14) ADDL. CIT, SPECIAL RANGE 7, VS. M/S. PEC LIMITED, NEW DELHI. 9 TH FLOOR, HANSALAYA, 15, BARAKHAMBA ROAD, NEW DELHI 110 001. (PAN : AAACT0101G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DAMANPREET SINGH, CA REVENUE BY : SHRI ANIL GANDHI, SENIOR DR DATE OF HEARING : 11.10.2021 DATE OF ORDER : 20.10.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ADDL. CIT, SPECIAL RANGE 7, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILIN G THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 31.07.2017 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS )-38, NEW DELHI QUA THE ASSESSMENT YEAR 2013-14 ON THE GROUND S INTER ALIA THAT:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN DELETING ADDITION ON ACCOU NT OF CLAIM ITA NO.6607/DEL./2017 2 OF CSR AMOUNTING TO RS.3,79,19,732/- WITHOUT GOING INTO THE MERIT OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF INTER EST ON REFUND OF INCOME TAX AMOUNTING TO RS.30,54,780/- WITHOUT G OING INTO THE MERIT OF THE CASE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY IS A PUB LIC SECTOR UNDERTAKING UNDER THE MINISTRY OF COMMERCE & TRADE AND ENGAGED IN THE BUSINESS OF CARRYING ON TRADING ACTIVITIES I NCLUDING IMPORTS AND EXPORTS OF VARIOUS ITEMS ON BACK TO BACK AGREEM ENT AND COMMISSION BASIS. IT IS ALSO CARRYING ON JOINT OPE RATION FOR CRUSHING OF SOYA SEEDS, PURCHASES AND SALE OF RAPES EED, SOYA MEAL AND SOYA OIL UNDER AGREEMENT WITH ASSOCIATES. IN A DDITION, ASSESSEE IS ALSO ENGAGED IN HEDGING TRANSACTIONS IN DERIVATI VES ON COMMODITY EXCHANGES AND IMPORTING REFINED EDIBLE OI L FOR PUBLIC DISTRIBUTION SCHEME OF GOVERNMENT OF INDIA. 3. DURING THE SCRUTINY PROCEEDINGS, ASSESSING OFFIC ER (AO) NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.4.58 CRORES TO PROFIT & LOSS ACCOUNT AS CORPORATE SOCIAL RESPONSIB ILITY (CSR) EXPENSES. ASSESSEE WAS CALLED UPON TO EXPLAIN AS T O WHY THE EXPENSES UNDER THE HEAD CORPORATE SOCIAL RESPONSIB ILITY DEBITED UNDER ADMINISTRATIVE EXPENSES IN THE PROFIT & LOS S ACCOUNT SHOULD NOT BE DISALLOWED. DECLINING THE CONTENTIONS RAISE D BY THE ASSESSEE ITA NO.6607/DEL./2017 3 THAT CSR IS A BUSINESS EXPENDITURE AND COMPANY HAS TO INCUR SUCH EXPENSES UNDER THE GUIDELINES OF DEPARTMENT OF PUBL IC ENTERPRISES, AO DISALLOWED THE SAME BY FOLLOWING ASSESSEES OWN CASE FOR AY 2012-13 AND MADE ADDITION THEREOF TO THE INCOME OF THE ASSESSEE. 4. AO ALSO MADE ADDITION OF RS.30,54,780/- ON ACCOU NT OF AMOUNT OF INTEREST ON REFUND OF INCOME-TAX ON THE G ROUND THAT INTEREST ON INCOME-TAX REFUND IS A TAXABLE INCOME A ND THEREBY FRAMED THE ASSESSMENT AT THE TOTAL INCOME OF RS.53, 26,87,432/-. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEAL WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 7. LD. CIT (A) PASSED THE IMPUGNED ORDER BY FOLLOWI NG THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNA L ON IDENTICAL ISSUE IN CASE CITED AS ACIT VS. JINDAL POWER LIMITED (2011) 138 DTR 313 (RAIPUR)(TRIB.) BY RETURNING FOLLOWING FINDINGS :- ITA NO.6607/DEL./2017 4 '4.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AND THE SUBMISSIONS OF APPELLANT ON THIS ISSUE. THE VER Y FACT THAT CBDT HAS INSERTED EXPLANATION 2 TO SUBSECTION (1) O F SECTION 37 W.E.F. 01.04.2015, ACCORDING TO WHICH ANY EXPEND ITURE INCURRED BY AN ASSESSEE ON THE ACTIVITIES RELATING TO CORPORATE SOCIAL RESPONSIBILITY REFERRED TO IN SECTION 135 O F THE COMPANIES ACT, 2013 SHALL NOT BE DEEMED TO BE EXPEN DITURE INCURRED BY THE ASSESSEE FOR THE PURPOSES OF THE BU SINESS OR PROFESSION U/S 37(1) OF THE INCOME TAX ACT, 1961 ME ANS THAT EXPLANATION 2 TO SUBSECTION (1) OF SECTION 37 IS PR OSPECTIVE IN NATURE AND IS APPLICABLE FROM AY 2015-16 ONWARDS; AS SUCH THE SAME IS NOT APPLICABLE TO AY 2013-14. HENCE, TH ERE IS NO CASE FOR ANY DISALLOWANCE OF CSR IN THE IMPUGNED AY . RELIANCE IS PLACED ON ORDER OF HON'BLE ITAT RAIPUR IN THE CASE OF ACIT VS. JINDAL POWER LIMITED (2011) 138 DTR 313 (RAIPUR) (TRIB) IN WHICH HON'BLE ITAT HAS GIVEN REL IEF ON IDENTICAL GROUNDS. ACCORDINGLY, ASSESSING OFFICER I S DIRECTED TO DELETE THIS ADDITION AND GROUND OF APPEAL 2 IS ALLO WED.' 8. BARE PERUSAL OF THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) SHOWS THAT THERE IS NO SCOPE TO INTERFERE INTO THE FINDINGS RETURNED BY LD. CIT (A) AS THE EXPLANATION 2 TO SUB-SECTION (1) OF SECTION 37 IS PROSPECTIVE IN NATURE BEING EFFECTIVE FROM 01.04 .2015 AND AS SUCH, IS NOT APPLICABLE TO THE YEAR UNDER ASSESSMEN T I.E. 2013-14. MOREOVER, IT IS INCOMPREHENSIBLE AS TO HOW THE AO H AS ALLOWED THE AMOUNT OF RS.79,50,000/- OUT OF TOTAL CSR EXPEND ITURE OF RS.4.58 CRORES AND DISALLOWED THE REMAINING AMOUNT OF RS.3,79,19,732/-. SO, WE ARE OF THE CONSIDERED VIE W THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO BY FOLLOWING THE ORDER PASSED BY THE TRIBUNAL IN CASE OF CIT VS. JINDAL POWER LIMITED (SUPRA), HENCE GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. ITA NO.6607/DEL./2017 5 GROUND NO.2 9. AO HAS MADE ADDITION OF RS.30,54,7801- ON ACCOU NT OF INTEREST ON THE REFUND OF INCOME-TAX AMOUNTING TO R S.30,54,780/- ON THE GROUND THAT INTEREST ON INCOME-TAX REFUND IS A TAXABLE INCOME. 10. LD. CIT (A) ALSO DECIDED THE ISSUE IN ACCORDAN CE WITH THE FACTS AND LAW. WHEN FORM 26AS GENERATED B THE REVEN UE DEPARTMENT ONLY SHOWS THE AMOUNT OF REFUND ISSUED B UT FAIL TO FIGURE THE INTEREST ON REFUND ISSUED, IF ANY, THE A SSESSEE IS NOT REQUIRED TO MAKE ENTRY IN THE BOOKS OF ACCOUNT FOR INTEREST. MERE ADDITION ON THE BASIS OF INTERNAL AIR IS NOT SUSTAI NABLE. SO, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS DECIDED THE ISSUE AFTER THRASHING THE FACTS ON THE BASIS OF LAW APPLICABLE THERETO. SO, GROUND NO.2 IS DETERMINED AGAINST THE REVENUE. 11. RESULTANTLY, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 20 TH DAY OF OCTOBER , 2021. SD/- SD/- (O.P. KANT) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 20 TH DAY OF OCTOBER, 2021 TS ITA NO.6607/DEL./2017 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-38, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.