SONI HOSPITALS PVT. LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5, JAIPUR

ITA 756/JPR/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6987 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 23-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONISHA CHOUDHARY JT
• Keywords: Maximum Marginal Rate; Corroborative evidences; Competent authority
• Section: 43B; 143(3); 37(1); 250; 139(1); 13; 145(3); 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 756/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2014-15 M/S SONI HOSPITALS PVT. LTD., 38, SONI HOSPITAL KANOTA BAG, JLN MARG, JAIPUR CUKE VS. ACIT, CIRCLE-05, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAGCS9508N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE (WRITTEN SUBMISSION) JKTLO DH VKSJ LS @ REVENUE BY : SMT. MONISHA CHOUDHARY (JT. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 31/03/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 08/04/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 22.03.2019 RELEVANT FOR A.Y 2014-15 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL . 1. THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION U/S 36(1)(VA) OF RS. 1,60,983 BEING AM OUNT OF DELAYED DEPOSITS OF EMPLOYEES CONTRIBUTION TOWARDS ESI & P F. 2. THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 1,50,279 BEING AMOUNT OF EXPENS ES RELATED TO EARLIER YEARS BUT SETTLED DURING THE YEAR UNDER CON SIDERATION. 4. THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 2,50,000 OUT OF LUMPSUM DISALLO WANCE RS. ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 2 4,50,000 MADE OUT OF TRAVELLING & CONVEYANCE EXPENS ES AND BUSINESS PROMOTION EXPENSES. 2. NONE HAS APPEARED FOR THE ASSESSEE. THE LD. AR SHRI AKHILESH KUMAR JAIN HAS HOWEVER SUBMITTED A LETTER DATED 09. 03.2021 WHEREIN HE HAS STATED THAT THE APPEAL MAY BE DECIDED TAKING IN TO CONSIDERATION THE WRITTEN SUBMISSIONS SO FILED ON BEHALF OF THE ASSES SEE. IN HIS WRITTEN SUBMISSION, THE LD AR ON BEHALF OF THE ASSESSEE HAS SUBMITTED AS UNDER: GROUND NO.1- ADDITION OF RS.1,60,983/= FOR DELAYED DEPOSIT OF EMPLOYEES SHARE OF ESI & PF CONTRIBUTION FACTS AND SUBMISSIONS (I) ALL DUES WERE DEPOSITED WELL BEFORE DUE DATE OF FIL ING OF RETURN OF INCOME AS IS EVIDENT FROM THE PERUSAL OF THE TABLE REPRODUCED ON PAGE 2 OF THE APPELLATE ORDER. (II) THERE WAS NO ADDITION IN THE ASSESSMENTS ON THE ISS UE IN EARLIER ASSESSMENT YEARS EXCEPT FOR AY 2007-08 AND 2008-09 WHICH WERE SUBSEQUENTLY DELETED BY THE LEARNED CIT (APPEALS) I N ORDERS DATED 30.04.2014 AND 06.03.2013. (III) NO DISALLOWANCE / ADDITION IS ATTRACTED IN VIEW OF SEVERAL DECISIONS INCLUDING THAT OF THE ITAT-JPR, THE JURISDICTIONAL RAJASTHAN HIGH COURT AS WELL AS THE SUPREME COURT. FEW OF SUCH DECISIONS AR E CITED BELOW- (A) DCIT VS. RAJASTHAN RENEWABLE ENERGY CORPORATION LTD . [ITA NO. 772/JP/2018 & 817/JP/2018] ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 3 (B) DCIT, CC-II VS. J K INTERNATIONAL (APPEAL NO. 716 T O 718/JP/ 2018. ORDER DATED 30.09.2019) [2019] 10 TMI 396 ITAT (JP) (C) PRINCIPAL CIT VS M/S RAJASTHAN STATE BEVERAGES CORP ORATION LTD. [2017] 250 TAXMAN 0016 (SC): THE HC ALLOWED THE CLA IM AGAINST WHICH SLP WAS FILED BY THE DEPT. HELD - WE DO NOT FIND AN Y MERIT IN THIS PETITION. THE SPECIAL LEAVE PETITION IS, ACCORDINGLY, DISMISS ED. (D) CIT VS. M/S ALOM EXTRUSIONS LIMITED [2009] 319 ITR 306 (SC) (E) CIT VS VINAY CEMENT LTD. [2009] 313 ITR (ST.) 1 (SC ) (F) CIT VS. JAIPUR VIDYUT VITRAN NIGAM LTD 363 ITR 307 (RAJ) (G) CIT VS. UDAIPUR DUGDH UTPADAK SAHKARI SANGH LTD. 36 6 ITR 163 (RAJ.) (H) CIT VS. STATE BANK OF BIKANER & JAIPUR 363 ITR 70 (RAJ.) IN VIEW OF ABOVE, YOUR HONOURS ARE THEREFORE HUMBLY REQUESTED TO PLEASE DELETE THE ADDITION. GROUND NO. 2- DISALLOWANCE OF RS.150279/- SUSTAINED BEING EXPENSES RELATING TO EARLIER YEARS. FACTS AND SUBMISSIONS (I) THERE REMAINS SOME BILLS OF EXPENSES UNDER DISPUTE AT THE YEAR-END RESULTING IN ACCRUAL OF LIABILITY IN THE YEAR OF SE TTLEMENT AND THUS UNDER MERCANTILE METHOD OF ACCOUNTING, ENTRY IS PASSED I N SUBSEQUENT YEAR THEN THE YEAR IN WHICH SERVICE OR SUPPLY WAS RECEIVED. A ND THIS ACCOUNTING PRACTICE IS BEING CONSISTENTLY FOLLOWED. FOR A LARG E BUSINESS CONCERN HAVING DIFFERENT OPERATIONAL UNITS, SUCH INSTANCES ARE BOU ND TO EXIST FOR OBVIOUS REASONS. ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 4 (II) PERUSAL OF FOLLOWING TABLE REVEALS THAT THERE REMA INS FEW INSTANCES OF SETTLEMENT OF LIABILITY IN SUBSEQUENT YEARS:- ASSESSMENT YEAR AMOUNT OF PREVIOUS YEAR EXPENSES 2011-12 RS.20,28,549/= 2012-13 RS.3,83,039/= 2013-14 RS.2,61,712/= 2014-15 RS.1,58,775/= (III) IT IS WORTHY TO NOTE HERE THAT IN THE YEARS, PRIOR TO CURRENT YEAR, NO DISALLOWANCE FOR PRIOR PERIOD EXPENSES WAS MADE IN ASSESSMENT PROCEEDINGS U/S 143(3) EVEN THOUGH THE AMOUNT WAS M UCH HIGHER. (IV) IN C.K. GANGADHARAN V. CIT [2008] 304 ITR 61/172 TA XMAN 87 (SC) AND MANY OTHER JUDICIAL FORUMS HAVE HELD THAT VIEW TAKEN BY THE DEPARTMENT IN EARLIER YEARS SHOULD NOT BE DISTURBED UNLESS THERE IS CHANGE IN FACTUAL AND LEGAL POSITION. (V) RELIANCE IS ALSO PLACED ON DECISION RENDERED ON OF THE HONBLE ITAT, JAIPUR IN THE CASE OF DCIT VS. THE RAJASTHAN RENEWA BLE ENERGY CORPORATION LTD. RENDERED IN APPEAL NO. ITA NO 772 & 817/JP/2018 (COPY ENCLOSED) IN VIEW OF ABOVE, YOUR HONOURS ARE THEREFORE HUMBLY REQUESTED TO PLEASE DELETE THE DISALLOWANCE. GROUND NO. 3- LUMP SUM DISALLOWANCE OF RS.250000/- SUSTAINED BEING EXPENSES ALLEGING THAT EXPENSES WERE NOT VERIFIABL E IN ABSENCE OF PROPER BILLS/ PAID ON SELF-MADE VOUCHERS. ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 5 FACTS AND SUBMISSIONS (I) BEING A LARGE ORGANISATION THERE IS STRICT INTERNAL CONTROL SYSTEM IN OPERATION AND EACH EXPENSE IS SUBJECT TO VERIFICATI ON BY SUPERIOR AUTHORITY BEFORE PAYMENT/RECORDING IN BOOKS OF ACCOUNTS. (II) BEING A LARGE ORGANISATION IN HEALTH SERVICES AND O PERATING VARIOUS UNITS MULTI SUPER SPECIALITY HOSPITAL, NURSING S CHOOL-COLLEGE, CT & MRI CENTRE UNDER PPP MODE AT SMS HOSPITAL, PAYMENT OF EXPENSES BY WAY OF REIMBURSEMENT OF CASH TO STAFF MEMBERS ON SELF-MADE VOUCHERS CANNOT BE AVOIDED. (III) PERUSAL OF TABLE REPRODUCED ON PAGE 8 AND 9 OF THE APPELLATE ORDER REVEALS THAT ALL THE PAYMENTS WERE MADE TO KNOWN PE RSONS. OUT OF AGGREGATE EXPENSES OF RS.44,79,018.61 (33,69,566.97 + 11,09,451.64) A SUM OF RS.12,89,080.58 (7,13,656.59 + 5,75,423.99) WAS REIMBURSEMENT TO STAFF MEMBERS AND REST AMOUNT PAID/CREDITED TO O UTSIDE PARTIES AGAINST THEIR BILLS. (IV) ALL THE EXPENSES FULFILLED THE ALLOWABILITY CRITERI A PRESCRIBED IN SECTION 37(1) OF THE INCOME TAX ACT, 1961. (V) RELIANCE IS PLACED ON DECISION RENDERED ON 19.12.20 19 BY THE HONBLE ITAT, JAIPUR IN THE CASE OF M/S MAGHALAYA C ONSTRUCTIONS & SUPPLY CO. VS. ACIT IN APPEAL NO. ITA NO 694/JP/2019 (COPY ENCLOSED). THE HONBLE ITAT HELD THAT IF CERTAIN CLAIM OF EXP ENDITURE IS NOT FOUND TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE, THEN THE SAME IS LIABLE TO BE DISALLOWED. HOWEVER, IF THE EX PENDITURE INCURRED IS ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 6 FOUND FOR THE BUSINESS PURPOSE THEN DUE TO CERTAIN IRREGULARITY IN MAINTAINING SUPPORTING EVIDENCE, AN AD HOC DISALLO WED IS NOT CALLED FOR. ACCORDINGLY, WITHOUT SPECIFYING THE INSTANCE OF THE EXPENDITURE, WHICH IS EITHER EXCESSIVE OR FOUND NOT INCURRED FOR THE BUSI NESS OF THE ASSESSEE, THE ACTION OF THE AO IN MAKING AD HOC DISALLOWANCE AND CONFIRMED BY THE LD. CIT (APPEALS) IS NOT JUSTIFIED. HENCE, AD HOC D ISALLOWANCE IS DELETED. (VI) FURTHER RELIANCE IS PLACED ON THE FOLLOWING FEW DEC ISIONS ON SIMILAR ISSUES- J J ENTERPRISES VS. CIT 254 ITR 216 (SC) DWARKA PRASAD AGARWAL VS. ITO 52 ITD 239 ACIT VS. AMTEK AUTO LTD. 112 TTJ 455 IN VIEW OF ABOVE, YOUR HONOURS ARE THEREFORE HUMBLY REQUESTED TO PLEASE DELETE THE DISALLOWANCE. 3. PER CONTRA, THE LD. DR RELIED ON THE ORDER OF TH E LOWER AUTHORITIES AND OUR REFERENCE WAS DRAWN TO THE FINDINGS OF THE LD. CIT(A) WHICH READS AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE LD. AUTHORIZED RE PRESENTATIVE ARGUED THAT ASSESSEE DEPOSITED ESI AND PF CONTRIBUTION AFT ER THE DUE DATE BUT BEFORE DUE DATE OF FILING OF RETURN OF INCOME. I FI ND THAT IN A RECENT CASE OF M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED, JAIPUR FOR ASSESSMENT YEARS 2012-13, 2010-11 AND 2011-12 IN D. B.I.T. APPEAL NOS. 10/2018, 11/2018 AND 12/2018 DATED 13.03.2018 THE H ON'BLE RAJASTHAN HIGH COURT HAS DECIDED THE FOLLOWING QUESTIONS OF L AW 'II WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE ITAT WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 3,95,066/- MADE FOR ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 7 DEPOSITION THE EMPLOYEE'S CONTRIBUTION TO PF AND ES I BEYOND THE PRESCRIBED TIME LIMIT PROVIDED IN THE RESPECTIVE AC TS. III WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ITAT WAS JUSTIFIED IN HOLDING THAT EMPLOYEE'S CONTR IBUTION TO PF AND ESI GOVERNED BY THE PROVISION OF SECTION 43B AND NO T BY SECTION 36(1)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT.? ' THE HON'BLE JURISDICTIONAL COURT HAS DECIDED AS FOL LOWS: '6. WITH REGARD TO ISSUE NO. 2 AND 3 THE CONTROVERS Y IS PENDING BEFORE THE SUPREME COURT IN C.I.T, JAIPUR VS. M/S STATE BA NK OF BIKANER AND JAIPUR IN SLP NO. 16249/2014, THEREFORE, SUBJECT T O DECISION OF SLP, FOR THE PRESENT, THESE ISSUES ARE DECIDED IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE. IT WILL BE OPEN FOR THE D EPARTMENT TO RECOVER THE AMOUNT IF THE DECISION IS IN THEIR FAVO UR.' IN VIEW OF THE SAME THE DISALLOWANCE MADE BY THE A SSESSING OFFICER IS CONFIRMED. THIS GROUND OF APPEAL IS DISM ISSED. 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASS ESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER MADE THE DISALLOWANCE BY HOLDING THAT THE ASSESSEE IS FOLLOW ING MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE PRIOR PAID EXPENSES ARE NOT ALLOWABLE. LD. AUTHORIZED REPRESENTATIVE FILED THE DETAILS OF THE EXPENSES AND CLAIMED THAT THE SAME WERE SETTLED DURING THE YEAR. ON PERUSAL OF OVERALL FACTS, I FIND THAT OUT OF THE TOTAL EXPENSES, ONLY THE EXPENSES RELATING TO THE SALARY TO STAFF AMOUNTING TO RS. 8,496/- IS SETTLED DURING THE YEAR. THEREFORE, THE DISALLOWANCE OF RS. 8,496/- IS DELETED. ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 8 THE BALANCE DISALLOWANCE IS CONFIRMED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 4.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OF FICER MADE LUMPSUM DISALLOWANCE OUT OF RS. 4,50,000/- OF VARIOUS EXPEN SES CLAIMED BY ASSESSEE VIZ TRAVELLING, CONVEYANCE AND BUSINESS PR OMOTION, TOTALING TO RS.44,79,017/- WHICH IS ROUGHLY 10% OF THE EXPENSES CLAIMED. THIS DISALLOWANCE WAS MADE DUE TO NOT BEING FULLY SUPPOR TED BY BILLS/EVIDENCES. THOUGH THE DISALLOWANCE MADE IS IN ORDER DUE TO THE REASONS GIVEN BUT SINCE THE DISALLOWANCE SEEMS TO B E BIT EXCESSIVE, I RESTRICT IT TO RS.2,50,000/-. ASSESSEE GETS PART RE LIEF. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. REGARDING THE FIRST ISSUE, AD MITTEDLY, THE EMPLOYEESS CONTRIBUTION TO ESI AND PF HAVE BEEN PAID BEFORE TH E DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT. THE ISSUE I S NO MORE RES INTEGRA IN LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS OF THE HON BLE RAJASTHAN HIGH COURT RELIED UPON BY THE ASSESSEE. REGARDING THE DE CISION OF THE HONBLE RAJASTHAN HIGH COURT IN CASE OF RAJASTHAN RENEWAL E NERGY CORPORATION LIMITED (SUPRA) RELIED UPON BY THE LD CIT(A), WE AR E OF THE CONSIDERED BELIEF THAT HAVING READ THE SAID DECISION IN ITS EN TIRETY, THE DECISION INFACT SUPPORTS THE CASE OF THE ASSESSEE RATHER THAN THE R EVENUE. IN FACT, THE COORDINATE BENCH HAS DEALT WITH AN IDENTICAL ISSUE AND THE SAID DECISION HAS BEEN EXAMINED IN DETAIL IN CASE OF M/S K.S. AUT OMOBILES PVT. LTD VS ITO (ITA NO. 1184 &1185/JP/18 DATED 8.3.2019) WHEREIN THE RELEVANT FINDINGS ARE AS UNDER: ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 9 3. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE V ARIOUS DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT INCLUDING THE DECISION IN CASE OF CIT VS. STATE BANK OF BIKANER & JAIPUR 99 DTR 131 A S WELL AS DECISION IN CASE OF CIT VS. JAIPUR VIDYUT VITRAN NI GAM LTD. 363 ITR 307 AND IN CASE OF CIT VS. UDAIPUR DUGDH UTPADAK S AHAKARI SANGH LTD. 366 ITR 163. WE FURTHER NOTE THAT THE LD. CIT( A) THOUGH HAS NOT DISPUTED THE VARIOUS DECISIONS OF HONBLE HIGH COURT HOWEVER, DISALLOWANCE MADE BY THE AO ARE SUSTAINED AS HE MIS UNDERSTOOD THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N CASE OF PCIT VS. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED IN DB ITA NO. 10,11 & 12/2018 DATED 13.03.2018. IN THE CASE OF PC IT VS. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED (SUP RA) THE HONBLE HIGH COURT HAS CONSIDERED THIS ISSUE IN PA RA 4 TO 6 AS UNDER:- 4. SO FAR AS QUESTION NO. 1 IS CONCERNED, THE SAME IS NOW COVERED BY THE DECISIONS OF THIS COURT IN PRINCIPAL COMMISSIONER OF INCOME-TAX V/S RAJASTHAN STATE SEED CORPORATION LTD. [2016] 386 ITR 267 (RAJ) WHEREIN I T HAS BEEN HELD AS UNDER:- IN SO FAR AS THE EXPENDITURE INCURRED ON STATE REN EWAL FUND IS CONCERNED, THE SAID EXPENDITURE ALSO GOES TO SHO W THAT THE RENEWAL FUND WAS SET UP BY THE STATE GOVERNMENT AND WAS CREATED WITH THE OBJECT OF PROVIDING A SAFETY NET F OR THE WORKERS LIKELY TO BE EFFECTED BY RESTRICTING IN THE STATE PUBLIC ENTERPRISE AND THAT A FINDING OF FACT HAS BEEN RECO RDED THAT THE CONTRIBUTION MADE TO THE STATE RENEWAL FUND IS SOLELY FOR ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 10 THE PURPOSES OF THE WELFARE AND BENEFIT OF THE EMPL OYEES. IN OUR VIEW, IT IS FOR THE ASSESSEE TO DECIDE WHETHER ANY EXPENDITURE SHOULD BE INCURRED IN THE COURSE OF BUS INESS AND EXPENDITURE OF THIS NATURE BEING FOR BUSINESS EXPED IENCY IS CERTAINLY ALLOWABLE DEDUCTION UNDER SECTION 37(1) O F THE ACT. IN OUR VIEW ANY NORMAL EXPENDITURE FOR THE WELFARE AND BENEFIT OF THE EMPLOYEES IS ALLOWABLE EXPENDITURE U NDER SECTION 37(1), THE TRIBUNAL HAS COME TO A FINDING O F FACT THAT IT WAS A LEGAL OBLIGATION OF THE RESPONDENT-ASSESSE E TOWARDS CONTRIBUTION OF THE SAID AMOUNT TO THE STATE RENEWA L FUND AND THERE BEING A LEGAL OBLIGATION AS WELL IN OUR V IEW THE TRIBUNAL HAS COME TO A CORRECT CONCLUSION. IN VIEW OF THE ABOVE, QUESTION NO. 1 IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 6. WITH REGARD TO ISSUE NO. 2 AND 3 THE CONTROVERSY IS PENDING BEFORE THE SUPREME COURT IN C.I.T., JAIPUR VS/ MS STATE BANK OF BIKANER AND JAIPUR IN SLP NO. 16249/ 2014, THEREFORE, SUBJECT TO DECISION OF SLP, FOR THE PRES ENT, THESE ISSUES ARE DECIDED ON IN FAVOUR OF THE DEPARTMENT A ND AGAINST THE ASSESSEE. IT WILL BE OPEN FOR THE DEPARTMENT TO RECOVER THE AMOUNT IF THE DECISION IS IN THEIR FAVOUR. THUS, IT IS CLEAR THAT THE HONBLE JURISDICTIONAL H IGH COURT HAS FOLLOWED THE EARLIER DECISIONS IN CASE OF PCIT VS. RAJASTHAN STATE SEED CORPORATION LIMITED 386 ITR 267 AS WELL AS DEC ISION IN CASE OF CIT VS. STATE BANK OF BIKANER & JAIPUR (SUPRA). ALL THESE DECISIONS WHICH WERE ALLOWED BY THE HONBLE JURISDICTIONAL HI GH COURT ARE IN FAVOUR OF THE ASSESSEE HOWEVER, IN THE CONCLUSION I N PARA 6 THERE IS ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 11 A TYPOGRAPHICAL MISTAKE WHEREIN IT IS STATED THESE ISSUES DECIDED IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE. THE WHOLE DECISION OF THE HONBLE HIGH COURT HAS TO BE CONSI DERED IN THE CONTEXT OF THE DECISION FOLLOWED AND THE SUBSEQUENT LINE WHICH SAYS IT WILL BE OPENED FOR THE DEPARTMENT TO RECOVER TH E AMOUNT IF THE DECISION IN THEIR FAVOUR WHICH MEANS THAT IN CASE OF FURTHER APPEAL BEFORE HONBLE SUPREME COURT IF DECISION IS DELIVER ED IN FAVOUR OF THE DEPARTMENT IT CAN RECOVER THE AMOUNT. THEREFORE , EVEN THE DECISION WHICH IS RELIED UPON THE LD. CIT(A) THE SA ME IS IN FAVOUR OF THE ASSESSEE THOUGH DUE TO TYPOGRAPHICAL MISTAKE IT WAS MISUNDERSTOOD BY THE LD. CIT(A) AS IN FAVOUR OF THE REVENUE. ACCORDINGLY, IN VIEW OF A SERIES OF DECISIONS OF TH E HONBLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE AND FURTHER HONBLE SUPREME COURT IN CASE OF PCIT VS. RAJASTHAN STATE BEVERAGES CORPORATION LTD. 250 TAXMANN 16 HAS DISMI SSED THE SLP FILED BY THE DEPARTMENT THIS ISSUE IS DECIDED IN FA VOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE, DISALLOWAN CES/ADDITIONS MADE BY THE AO ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF & ESI ARE DELETED. WE ACCORDINGLY SET-ASIDE THE ORDER OF THE LD CIT(A) AND THE DISALLOWANCE MADE BY THE AO TOWARDS EMPLOYEES CONTRIBUTION TO ES I AND PF IS HEREBY DELETED. IN THE RESULT, THE GROUND NO. 1 OF THE ASS ESSEES APPEAL IS ALLOWED. 5. REGARDING DISALLOWANCE OF PRIOR PERIOD EXPENSES , IT IS INCUMBENT UPON THE ASSESSEE TO ACCOUNT FOR THE EXPENSES IN RE SPECTIVE FINANCIAL YEAR IN WHICH THEY ARE INCURRED OR THE LIABILITY TOWARDS SUCH EXPENSES HAS ACCRUED WHICH IS IN LINE WITH THE MERCANTILE SYSTEM OF ACCOUNTING AS WELL AS CONCEPT OF MATCHING ACCOUNTING PRINCIPLE WHERE T HE REVENUES AND ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 12 CORRESPONDING EXPENSES ARE ACCOUNTED FOR IN THE RES PECTIVE YEARS. AT THE SAME TIME, THERE ARE BUSINESS EXIGENCIES WHERE AT T IMES, THERE ARE DISPUTES REGARDING THE AVAILMENT/RENDERING OF SERVI CES OR THE QUANTIFICATION OF AMOUNT PAYABLE AND THE SAME ARE S ETTLED IN SUBSEQUENT FINANCIAL YEAR. TO TAKE CARE OF SUCH EXIGENCIES, W HAT IS RELEVANT TO DETERMINE IS THE CRYSTALLIZATION OF LIABILITY OR IN OTHER WORDS, WHEN THE AMOUNT HAS ACTUALLY BECOME DUE AND PAYABLE. SECOND LY, FROM THE REVENUES PERSPECTIVE, WHAT IS EQUALLY RELEVANT IS THAT THERE NO CHANGES IN THE MAXIMUM MARGINAL RATES OF TAXATION AND THERE IS NO LOSS OF REVENUE WHERE THE EXPENSES ARE BOOKED IN SUBSEQUENT FINANCI AL YEAR. IN THE INSTANT CASE, THE LD CIT(A) HAS ACCEPTED THE FACT T HAT THE SALARY PERTAINING TO EARLIER YEARS AND PAYABLE TO CERTAIN STAFF MEMBE RS HAVE BEEN SETTLED DURING THE YEAR AND HENCE, THE SAME HAS BEEN ALLOWE D. IN RESPECT OF OTHER EXPENSES AS WELL, WE FIND THAT THERE ARE ADVE RTISEMENT, PRINTING AND STATIONERY EXPENSE WHICH PERTAIN TO EARLIER YEARS A ND WHICH HAVE AGAIN BEEN FINALLY SETTLED DURING THE YEAR. SIMILARLY, TH ERE ARE LEGAL AND PROFESSIONAL EXPENSE WHICH HAVE BEEN SETTLED DURING THE YEAR AND LIABILITY TOWARDS SERVICE TAX WHICH HAS BEEN PAID DURING THE YEAR. WE THEREFORE FIND THAT THESE EXPENSES ARE DULY ALLOWABLE IN THE HANDS OF THE ASSESSEE AS SETTLED DURING THE YEAR AND IN ANY CASE, THERE A RE NO CHANGES IN THE TAX RATES AND THUS, NO PREJUDICE IS CAUSED TO THE REVEN UE AND AS HELD BY THE COURTS, SUCH AN EXERCISE OF DISALLOWING OTHERWISE A LLOWABLE EXPENSES TREATING AS MERE PRIOR PERIOD EXPENSES WILL ONLY RE SULT IN AN ACADEMIC DISCUSSION WITHOUT ANY TANGIBLE RESULTS. SIMILAR V IEW HAS BEEN TAKEN BY THE COORDINATE BENCH IN CASE OF DCIT VS RAJASTHAN R ENEWABLE ENERGY CORPORATION LTD (SUPRA) WHERE IT WAS HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE INCURRENCE OF EXPENDITURE FOR THE PURPOSES ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 13 OF BUSINESS IS NOT BEEN DISPUTED BY THE REVENUE. FU RTHER, THE LD AR HAS EXPLAINED THAT THE EXPENDITURE HAS BEEN BOOKED AFTER SEEKING THE APPROVAL FROM THE COMPETENT AUTHORITY DURING TH E YEAR AND THE SAME IS CONSISTENT WITH THE ACCOUNTING PRACTICE OF BOOKING THE EXPENSES IN EARLIER YEARS. WE ACCORDINGLY DONOT SEE ANY BASIS FOR DISALLOWANCE OF THE EXPENDITURE SO CLAIMED BY THE A SSESSEE. IN VIEW OF THE SAME, THE AO IS DIRECTED TO ALLOW THE SAME A ND THE GROUND NO. 3 OF ASSESSEES APPEAL IS ALLOWED. IN LIGHT OF AFORESAID DISCUSSION, THE DISALLOWANCE OF RS 150,279 IS HEREBY DIRECTED TO BE DELETED AND GROUND NO. 2 OF ASSESSEE S APPEAL IS ALLOWED. 6. NOW, COMING TO DISALLOWANCE OF TRAVEL, CONVEYANC E AND BUSINESS PROMOTION EXPENSES, THE AO HAS DISALLOWED A SUM OF RS 450,000/- HOLDING THAT SOME OF THE EXPENSES ARE NOT FULLY SUPPORTED B Y PROPER BILLS/VOUCHERS AND THUS NOT SUBJECT TO VERIFICATION. ON APPEAL, T HE LD CIT(A) UPHELD THE FINDING OF THE AO AND AT THE SAME TIME, HOLDING THA T THE DISALLOWANCE SEEMS TO BE BIT EXCESSIVE HAS RESTRICTED THE DISALL OWANCE TO RS 250,000/-. WE FIND THAT THE AO IS WELL WITHIN HIS RIGHT AND JU RISDICTION TO EXAMINE THE CLAIM OF THE EXPENSES AND ADOPT AN APPROPRIATE METH ODOLOGY OF DETERMINING THE NATURE AND SAMPLE SIZE OF EXPENSES AND ON EXAMINATION THEREOF, WHERE HE FIND THAT THE EXPENSE ARE NOT GEN UINE OR HAVE NOT BEEN INCURRED FOR THE PURPOSES OF BUSINESS, THE SAME CAN BE DISALLOWED. HOWEVER, BEFORE ARRIVING AT SUCH A FINDING, HE HAS TO RECORD SPECIFIC FINDING HIGHLIGHTING PARTICULAR EXPENDITURE WHICH A CCORDINGLY TO HIM IS NOT ALLOWABLE AND THE REASONS FOR THE SAME WHICH IN THE INSTANT CASE IS CONSPICUOUSLY ABSENT AND THUS, THE DISALLOWANCE SO MADE AND SUSTAINED BY THE LD CIT(A) IS CLEARLY IN THE NATURE OF AN ADH OC DISALLOWANCE WHICH CANNOT BE SUSTAINED IN THE EYES OF LAW. SIMILAR VI EW HAS BEEN TAKEN BY ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 14 THE COORDINATE BENCH IN CASE OF MEGHALAYA CONSTRUCT ION AND SUPPLY COMPANY VS ACIT (SUPRA) WHERE IT WAS HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS RECO RDED A FINDING THAT ON EXAMINATION OF BILLS AND VOUCHERS OF EXPENS ES, IT WAS NOTICED THAT THE ASSESSEE DID NOT MAINTAIN PROPER A ND COMPLETE VOUCHERS OF THESE EXPENSES AND SOME OF THE PAYMENTS WERE MADE IN CASH. FURTHER, IT WAS NOTICED BY THE ASSESSING O FFICER THAT SOME OF THE VOUCHERS OF THESE EXPENSES ARE SELF MADE AND WI THOUT SUPPORTING BILLS AND NOT VERIFIABLE FULLY, THEREFOR E, HE HAS MADE A LUMPSUM DISALLOWANCE OF RS. 2,00,000/-. IN OUR VIEW , IN THE ABSENCE OF ANY SPECIFIC FINDINGS THAT THE CLAIM OF THE EXPENDITURE ARE EITHER BOGUS OR NOT BEEN INCURRED WHOLLY AND EX CLUSIVELY FOR THE PURPOSES OF BUSINESS, THERE IS NO BASIS FOR MAKING ANY ADHOC DISALLOWANCE OF EXPENSES AND THE SAME CANNOT BE SUS TAINED IN THE EYES OF LAW. WE FIND THAT SIMILAR ISSUE HAS BEEN E XAMINED BY THE COORDINATE BENCH IN CASE OF M/S KUMAR & BROTHERS VS . ITO (SUPRA) WHEREIN THE COORDINATE BENCH HAS HELD AS UNDER:- 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE A.O. HAS GIVEN REA SONS FOR MAKING AD HOC DISALLOWANCE OF RS. 1.50 LACS THAT TO O AS A LUMP SUM TRADING ADDITION AS THE FREIGHT EXPENSES W ERE NOT FULLY SUPPORTED BY PROPER BILLS AND VOUCHERS. THOUG H THE TERM USED BY THE A.O. IN THE ASSESSMENT ORDER BEING THE TRADING ADDITION IS NOT JUSTIFIED WHEN THERE IS NO REJECTIO N OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. HOWEVER, IN SUBSTANC E, THE A.O. HAS MADE THIS ADDITION ON ACCOUNT OF CLAIM OF EXPENSES ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 15 NOT VERIFIABLE. THE A.O. HAS NOT GIVEN THE FINDING THAT THE CLAIM OF EXPENDITURE IS EITHER EXCESSIVE OR BOGUS H AVING REGARD TO THE FACTS OF TURNOVER DURING THE YEAR UND ER CONSIDERATION AND NATURE OF BUSINESS OF THE ASSESSE E. THERE IS NO DISPUTE THAT IN THE BUSINESS OF THE ASSESSEE, TH E FREIGHT EXPENSES ARE INEVITABLE AND THEREFORE, IF THE CLAIM IS NOT FOUND TO BE EXCESSIVE OR BOGUS THEN MERELY BECAUSE OF THE SOME OF THE EXPENSES ARE NOT SUPPORTED BY PROPER VO UCHERS, NO AD HOC DISALLOWANCE IS CALLED FOR. THE LD. CIT(A ) HAS CONFIRMED THE DISALLOWANCE IN PARA 5.4 AND 5.5 OF T HE IMPUGNED ORDER AS UNDER: 5.4 I HAVE CONSIDERED THE ABOVE MENTIONED FACTS OF THE CASE. ANY EXPENDITURE OF THE NATURE MENTIONED ABOVE IS CLAIMED UNDER SECTION 37 OF THE ACT. IN ORDER TO GE T THE DEDUCTION UNDER SECTION 37 OF THE ACT, PRIMARY ONUS LIES ON THE ASSESSEE TO PROVE THAT SUCH EXPENDITURE ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. 5.5 IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO PROVIDE SUPPORTING DOCUMENTS TO PROVE THAT SUCH EXPENDITURE S ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. THEREFORE, IN MY CONSIDERED VIEW A DISALLOWANCE OF RS. 1,50,000/- OUT OF THE EXPENSE S CLAIMED ON THE ABOVE MENTIONED EXPENDITURE IS REASONABLE TO COVER THE DISCREPANCIES MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. ACCORDINGLY, THE GROU ND OF APPEAL ON THIS ISSUE IS DISMISSED. ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 16 IF CERTAIN CLAIM OF EXPENDITURE IS NOT FOUND TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE OF THE ASSESSEE THEN THE SAME IS LIABLE TO BE DISALLOWED. HOWEVER, IF THE EXPENDITURE INCURRED BY THE ASSESSEE IS FOUND F OR THE BUSINESS PURPOSE OF THE ASSESSEE THEN DUE TO CERTAI N IRREGULARITY IN MAINTAINING THE SUPPORTING EVIDENCE AN AD HOC DISALLOWANCE IS NOT CALLED FOR. ACCORDINGLY, WITHOU T SPECIFYING THE INSTANCE OF THE EXPENDITURE, WHICH IS EITHER EX CESSIVE OR FOUND NOT INCURRED FOR THE BUSINESS OF THE ASSESSEE , THE ACTION OF THE A.O. IN MAKING AD HOC DISALLOWANCE AN D CONFIRMED BY THE LD. CIT(A) IS NOT JUSTIFIED. HENCE , AD HOC DISALLOWANCE OF RS. 1.50 LACS IS DELETED. IN LIGHT OF ABOVE DISCUSSIONS, THE ADHOC DISALLOWAN CE OF EXPENSES SO MADE BY THE ASSESSING OFFICER IS HEREBY DIRECTED TO BE DELETED. IN LIGHT OF AFORESAID DISCUSSION, THE DISALLOWANCE OF RS 250,000/- IS HEREBY DIRECTED TO BE DELETED AND GROUND NO. 3 OF ASSESSEE S APPEAL IS ALLOWED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/04/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/04/2021 * GANESH KR. ITA NO. 756/JP/2019 SONI HOSPITALS PVT. LTD., JAIPUR VS. ACIT, JAIPUR 17 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SONI HOSPITALS PVT. LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-05, 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. 756/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR