M/S MANGALAM CEMENT LTD., Jaipur V. ADD. CIT, Kota

ITA 81/JPR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82776 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Gift; Business expenditure; Corroborative evidences
• Section: 43B; 37(1); 37

Judgement Text

ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 81/JP/2012 ASSESSMENT YEAR : 2008-09 PAN : AABCM 6602 Q M/S. MANGLAM CEMENT LTD. VS. THE ADDL. CIT ADITYA NAGAR, MORAK RANGE-1 KOTA KOTA (APPELLANT) (RESPONDENT) ITA NO. 173/JP/2012 ASSESSMENT YEAR : 2008-09 PAN : AABCM 6602 Q THE ACIT VS. M/S. MANGLAM CEMENT CIRCLE- 1 ADITYA NAGAR, MORAK KOTA KOTA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY: SHRI SUBHASH CHANDRA DATE OF HEARING: 11-08-2014 DATE OF PRONOUNCEMENT: 30-09-2014 ORDER PER R.P. TOLANI, JM BOTH THESE APPEALS ARE THE CROSS APPEALS FILED AGA INST THE ORDER OF THE LD. CIT(A), KOTA DATED 29-12-2011 FOR THE ASSESSM ENT YEAR 2008-09. 2.1 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN IT S APPEAL. 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE DISALLOWANCE OF FOLLOWING EXPENSES. ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 2 HEAD OF EXPENSES AMOUNT OF EXPENSES CONSIDERED FOR DISALLOWANCE PERCENTAGE OF DISALLOWANCE AMOUNT DISALLOWED GIFTS TO DEALERS AND OTHERS 24,01,834/- 50% 12,00,917/- STAFF WELFARE 59,37,850/- 20% 11,87,572/- SALES PROMOTION 72,86,170/- 20% 14,57,234/- GENERAL CHARGES 10,73,621/- 20% 2,14,724/- SOCIAL WELFARE 6,70,204/- 20% 1,34,040/- 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE AO TO RECOMPUTE THE FBT PAYABLE BY THE ASSESSEE ON GIFTS TO DEALERS AND OTHERS, STAFF WELFARE EXPENDITURE, S ALES PROMOTION EXPENDITURE, GENERAL CHARGES EXPENSES AND SOCIAL WE LFARE EXPENDITURE BY HOLDING THAT FBT ON ASSESSEE WOULD B E LEVIABLE ONLY ON THE BALANCE AMOUNT AFTER REDUCING THE AMOUN T DISALLOWED OUT OF TOTAL EXPENSES INSTEAD OF DELETIN G THE DISALLOWANCES MADE UNDER THESE HEADS WHEN FBT ON TH E SAME IS PAID AND ASSESSED BY THE AO. 3.1 THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN:- (I) DELETING DISALLOWANCE OF RS. 33,47,732/- MADE U /S 43B; (II) DELETING DISALLOWANCE OF RS. 4,75,121/- MADE O N ACCOUNT OF ADDITIONAL EXPENDITURE; (III) REDUCING THE DISALLOWANCE FROM 50% TO 20% MAD E ON ACCOUNT OF STAFF WELFARE EXPENSES. 4.1 DURING THE COURSE OF HEARING, BOTH THE PARTIES AGREED THAT GROUNDS RAISED BY THE ASSESSEE'S APPEAL IS RELATED TO GROUN D NO. (III) OF THE REVENUES APPEAL. ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 3 5.1 THE BRIEF FACTS OF GROUND NO. (I) OF REVENUES APPEAL ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY TOOK TERM LOAN OF RS. 52.50 CRORES FROM STATE BANK OF INDIAN TO FINANCE I TS 17.50 MW CAPTIVE POWER PLANT. AS PER THE TERMS AND CONDITIONS OF THE TERM LOAN, INTEREST AMOUNTING TO RS. 33,74,732/- BECAME DUE FOR PAYMENT ON 31-03-2008. AS THE ASSESSEE COMPANY WAS FOLLOWING MERCANTILE SYSTE M OF ACCOUNTING, IT PROVIDED LIABILITY OF INTEREST OF RS. 33,74,732/- A S ON 31-03-2008 IN BOOKS OF ACCOUNT. THE PAYMENT OF SUCH INTEREST WAS MADE ON 0 3-04-2008 I.E. BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. ACCORDI NGLY, IN THE INCOME TAX RETURN, THE SAME WAS CLAIMED AS DEDUCTION U/S 43B O F THE ACT. AO HOWEVER DISALLOWED THE CLAIM. 5.2 IN FIRST APPEAL, THE LD. CIT(A) DELETED THE ADD ITION BY FOLLOWING OBSERVATION. 4.12 I HAVE GONE THROUGH AOS FINDING AND ASSESSEE' S SUBMISSION AND ALSO GONE THROUGH THE AGREEMENT AND PAYMENT DETAILS. IT IS SEEN THAT THE PAYMENT TO THE BANK WAS MADE A S PER AGREEMENT AND THE INTEREST BECAME PAYABLE ON TH E LAST DAY OF THE MONTH (I.E. 31-03-2008). THE INTERE ST WAS ALSO PAID BEFORE DUE DATE OF FILING OF RETURN. IN VIEW OF THE ABOVE THE INTEREST IS ALLOWABLE AS EXPENDITURE IN THE YEAR UNDER CONSIDERATION. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 33,74,732/-. ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 4 6.1 APROPOS GROUND NO. (II) OF THE REVENUE APPEAL, THE BRIEF FACTS OF THE CASE ARE THAT AN EXPENDITURE OF RS. 4,75,121/-, WH ICH INCLUDED A SUM OF RS. 1,69,469/- ATTRIBUTABLE TO INCOME BOOKED DURING THE YEAR WHICH WAS REVERSED IN THE NEXT YEAR PERTAINING TO ASSESSMENT YEAR 2008 -09; WAS PAID / BOOKED IN THE NEXT YEAR AND ANY PROVISION WAS ALSO NOT MADE IN THIS YEAR. HOWEVER THE SAME WAS BOOKED IN THE ACCOUNTS OF THE AY 2009-10 B EFORE FILING OF THE RETURN OF INCOME FOR AY 2009-10. SINCE BOTH THE CON TINGENCIES PERTAINED TO AY 2008-09 AND HAPPENED BEFORE FILING OF THE RETURN OF INCOME, THEREFORE, THE AMOUNT WAS CLAIMED IN THIS YEAR AND REVERSED IN ASSESSMENT YEAR 2009-10. THIS CLAIM WAS DISALLOWED BY THE AO. 6.2 IN FIRST APPEAL, THE LD. CIT(A) DELETED THE DIS ALLOWANCE BY FOLLOWING OBSERVATION. 4.22 I HAVE GONE THROUGH AOS FINDING AND ASSESSEE'S SUBMISSION. THE HON'BLE SUPREME COURT IN THE CASE OF M/S. KEDARNATH JUTE MFG. CO. LTD. VS. CIT, 82 ITR 363 (S C) AND SUTLEJ COTTON MILLS LTD. VS. CIT 116 ITR 1 (SC) WHEREIN S.C. HAS HELD AS UNDER:- FAILURE TO MAKE BOOK ENTRIES IS NO BAR TO ALLOW DEDUCTION. THE ASSESSEE IS ENTITLED TO A PARTICULAR DEDUCTION OR NOT WILL DEPEND ON THE PROVISION OF LAW RELATING THERETO LAND NOT ON THE VIEW WHICH THE ASSESSEE MIGHT TAKE OF HIS RIGHTS NOR CAN THE EXISTENCE OR ABSENCE OF ENTRIES IN THE BOOKS OF ACCOUNT BE DECISIVE OR CONCLUSIVE IN THE MATTER. ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 5 IN VIEW OF THE HON'BLE SUPREME COURT, IRRESPECTIVE OF ENTRIES IN THE BOOKS OF ACCOUNT AS THE EXPENDITURE RELATES TO THIS YEAR THE SAME IS ALLOWA BLE IN THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO DELETE THE ADDITION. 7.1 APROPOS GROUND NO. (III) OF THE REVENUE WHICH I S COMMON TO GROUND NO. 2 OF THE ASSESSEE. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED FOLLOWING EXPENSES. S.N. PARTICULARS AMOUNT 1. GIFTS TO DEALER/ MASON ON DEALERS/ MASON MEET 9,72,884/- 2. SWEETS ETC. ON OCCASION OF FESTIVALS/ VISITS OF GUEST/ GOVT. OFFICIALS 63,443/- 3. GIFTS TO GOVT. OFFICIALS/ GUESTS ON FESTIVAL / VISIT 13,65,507/- TOTAL 24,01,834/- THE AO MADE ADHOC DISALLOWANCE OF 50% OUT OF THE CL AIMED EXPENSES I.E. RS. 12,00,917/- BY OBSERVING THAT THE EXPENSES ARE UNVERIFIABLE AS THE ASSESSEE COMPANY FAILED TO FILE THE COMPLETE DETAIL S OF THE SAME. ASSESSEE CLAIMS THAT THE COMPLETE DETAILS OF THESE EXPENSES WERE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 14-12-2010. FROM THE SAID DETAILS, IT IS PROVED THAT THE GIFTS HAVE BEEN DISTRIBUTED TO DEALERS/ GOVT. OFFICIALS ON FESTIVAL/ VISIT WHICH IS A COMMON PHEN OMENON. THE EXPENSES ARE REASONABLE CONSIDERING THE VOLUME OF BUSINESS OF TH E ASSESSEE. THE AO AT PAGE 10 OF ITS ORDER HAS REFERRED TO FEW GIFT ITEMS BUT HAS NOT POINTED OUT THE ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 6 NATURE OF DEFECT IN THEM AND HAS NOT GIVEN ANY JUST IFIABLE REASONS FOR MAKING ADHOC DISALLOWANCE. THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE COMPANY IS NECESSARILY AND EXCLUSIVELY FOR THE PURP OSE OF BUSINESS AND QUALIFY FOR DEDUCTION U/S 37(1) OF THE ACT. ASSESSE E RELIED ON THE FOLLOWING CASE LAWS. 1. SAHARA INDIA MASS COMMUNICATIN VS. ACIT (2009-TI OL- 510-ITAT-DEL). 2. CIT VS. VARINDER AGRO CHEMICALS LTD. (2007) 290 ITR 147 THE AO HOWEVER DISALLOWED 50% THEREOF ON THE AD HOC BASIS. 7.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) CONTENDING THAT THE EXPENSES HAD NOT BEEN INCURRED ON A HOSPITALITY PROVIDED BY THE ASSESSEE TO ANY GUEST OR ANY OTHER PERSON. C ERTAIN FESTIVALS IN THE AREA LIKE DIWALI WERE CELEBRATED AND NOT ONLY IN BUSINES S CIRCLES BUT EVEN AMONG FRIENDS GIFTS AND SWEETS WERE DISTRIBUTED. THIS COU LD NOT BE HELD TO BE EXPENSES IN THE NATURE OF HOSPITALITY. THEREFORE, T HE EXPENDITURE OF DISTRIBUTION OF GIFTS ON FESTIVAL COULD NOT BE TERM ED TO BE ENTERTAINMENT. KEEPING IN VIEW THE NATURE OF BUSINESS, TURNOVER AN D OTHER RELATED FACTORS THE AMOUNT OF EXPENDITURE CLAIMED ON ACCOUNT OF PURCHAS E OF ARTICLES FOR DISTRIBUTION AS GIFTS ON FESTIVALS COULD NOT BE HEL D TO BE EXCESSIVE OR NOT FOR BUSINESS PURPOSES. ASSESSEE ALSO POINTED OUT THAT T HE ASSESSEE HAS PAID FBT ON GIFTS ITEMS. THE CBDT IN CIRCULAR NO. 8/2005 DAT ED 29-08-2005 HAS ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 7 CLARIFIED ON THIS ISSUE THAT WHERE EXPENSES ARE DIS ALLOWED U/S 37 OF THE I.T. WILL NOT BE AUTOMATICALLY LIABLE TO FBT. IN THE PRE SENT CASE, FBT IS LEVIED ON GIFT ITEMS AND THEREFORE, ONCE THE FBT IS LEVIED ON SUCH EXPENDITURE, NO PART OF THE EXPENDITURE CAN BE DISALLOWED U/S 37 OF THE ACT. 7.3 THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWIN G OBSERVATION. 4.32 I HAVE GONE THROUGH AOS FINDING AND ASSESSEE'S SUBMISSION. I HAVE ALSO GONE THROUGH DETAILS OF GIFTS MADE BY THE ASSESSEE. THE ASSESSEE HAS GIVEN DESCRIPTION OF VARIOUS EXPENDITURE INCURRED UNDER THIS HEAD. HOWEV ER, NO DETAILS TO WHOM THESE GIFTS WERE GIVEN AND HOW T HEY ARE WHOLLY AND EXCLUSIVELY SPENT FOR THE PURPOSE OF BUSINESS WAS NOT EXPLAINED. FOR EXAMPLE AN AMOUNT O F RS. 11,06,363/- WAS SHOWN TO HAVE BEEN PAID TO M/S. JHALANI SONS, JAIPUR TOWARDS DIWALI GIFT TO GOVERNM ENT OFFICERS. HOWEVER, NO DETAILS OF GIFTS DISTRIBUTED AND PURPOSE WAS FURNISHED BEFORE THE UNDERSIGNED. CONSIDERING ALL THE FACTS OF THE CASE A DISALLOWANCE OF 50% OUT OF TOTAL EXPENDITURE OF RS. 24,01,834/- IS CONSIDERED REASONABLE AND CONFIRMED. 7.4 HOWEVER, THE LD. CIT(A) DIRECTED THE AO TO RECO MPUTE THE FBT PAYABLE BY THE ASSESSEE BY FOLLOWING OBSERVATION. THE ASSESSEE ALSO CONTENDS THAT ASSESSEE HAS ALRE ADY PAID FBT ON THESE AMOUNTS AND SO NO DISALLOWANCE SH OULD BE MADE UNDER THIS HEAD. AS PER BOARDS CIRCULAR NO. 8/ 2005 DATED 29-08-2005, ISSUED IN THE FORM OF QUESTION AN SWER, ANY EXPENDITURE INCURRED FOR PERSONAL PURPOSE IS NOT AL LOWABLE AS DEDUCTION. HOWEVER, SUCH DEDUCTION WOULD NOT BE LIA BLE FOR FBT. ACCORDINGLY, IN THIS CASE FBT ON ASSESSEE WOUL D BE LEVIABLE ONLY ON THE BALANCE AMOUNT OUT OF TOTAL EX PENSES UNDER ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 8 THESE HEADS AS PART OF IT HAS ALREADY BEEN DISALLOW ED. IT WILL BE IN THE INTEREST OF JUSTICE THAT CONSEQUENTIAL RELIE F IS GIVEN BY THE AO IN THE ASSESSMENT OF ASSESSEE IN RESPECT OF FBT . THE AO IS DIRECTED TO GIVE CONSEQUENT BENEFIT ACCORDINGLY. 8.1 BY GROUND NO. (III) OF THE REVENUE IS AGGRIEVED ON THE RELIEF GIVEN BY LD CIT(A) ABOUT THE STAFF WELFARE EXPENSES OF RS. 5 9,37,859/-. THE AO OBSERVED THAT THESE EXPENSE INCLUDE EXPENSES INCURR ED ON CANTEEN AND GUEST HOUSE OF RS. 14,18,332/-, OTHER EXPENSES OF RS. 16, 15,615/- AND CLUB EXPENSES OF RS. 5,80,959/-. AO MADE ADHOC DISALLOW ANCE OF 50% OUT OF THE TOTAL CLAIMED EXPENSES I.E. RS. 29,68,929/-. 8.2 THE ASSESSEE IN FIRST APPEAL MADE FOLLOWING SUB MISSIONS. 4.41 (1) AT THE OUTSET, IT MAY BE POINTED OUT T HAT THE TOTAL EXPENDITURE CLAIMED UNDER THIS HEAD IS RS. 59,37,859/-. HOWEVER, THE AO HAS ONLY SPECIFIED EXPENDITURE OF RS. 36,14,906/- UNDER THE THREE HEAD S WHICH ACCORDING TO HIM CANNOT BE TREATED ENTIRELY A ND EXCLUSIVELY FOR BUSINESS PURPOSE. HENCE, DISALLOWAN CE OF 50% OF THE ENTIRE EXPENSES IS UNJUSTIFIED. 2. OUT OF THE EXPENSES SPECIFIED BY THE AO IN THE ASSESSMENT ORDER, NO DISCUSSION IS MADE BY HIM ON CANTEEN & GUEST HOUSE EXPENSES AND OTHER EXPENSES AGGREGATING TO RS. 30,33,947/-. FROM THE DETAILS OF THE EXPENSES, IT CAN BE NOTED THAT EXPENDITURE UNDER TH IS HEAD IS EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. AO HAS NOT POINTED OUT ANY PARTICULAR EXPENSE WHICH IS NOT FOR THE PURPOSE OF BUSINESS. THESE EXPENSES ARE INCURRE D EVERY YEAR AND HAVE BEEN ALLOWED BY THE AO. HENCE, NO DISALLOWANCE OUT OF THESE EXPENSES IS CALLED FOR. F URTHER, ON THE EMPLOYEES WELFARE EXPENSES, GUEST HOUSE EXPENSES AND FESTIVAL CELEBRATION EXPENSES INCLUDED UNDER THIS HEAD FBT HAS BEEN PAID AND THEREFORE, NO ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 9 DISALLOWANCE OUT OF THESE EXPENSES IS CALLED FOR AS EXPLAINED IN GROUND NO. 3 ABOVE. 3. SO FAR AS CLUB EXPENSES OF RS. 5,80,959/- IS CONCERNED, THE AO HAS INCORRECTLY APPLIED SECTION 10(10CC) AND SECTION 40(A)(V). SECTION 10(10CC) PROVIDES THAT INCOME IN THE NATURE OF PERQUISITE U/ S 17(2) SHALL NOT BE INCLUDED IN COMPUTING THE TOTAL INCOME OF AN EMPLOYEE IF TAX ON SUCH INCOME IS ACTUALLY PAID BY HIS EMPLOYER. IN THE PRESENT CASE THE CLUB EXPENSES INC URRED BY THE ASSESSEE IS NOT IN THE NATURE OF PERQUISITE AS SPECIFIED IN SECTION 17(2). THE EXPENDITURE SO INCU RRED IS ALSO NOT AN OBLIGATION WHICH BUT FOR SUCH PAYMENT W OULD HAVE PAYABLE BY THE EMPLOYEE AS SPECIFIED CLAUSE 17(2)(IV). HENCE SECTION 10(10CC) HAS BEEN INCORREC TLY APPLIED BY THE AO FOR MAKING THE DISALLOWANCE. OTHERWISE ALSO, THESE EXPENDITURE INCURRED BY THE ASSESSEE IS FOR THE PURPOSE OF BUSINESS. IN PAST, T HE SAME HAS BEEN ALLOWED TO THE ASSESSEE. HENCE, THE DISALLOWANCE MADE BY THE AO OUT OF SUCH EXPENSES IS UNJUSTIFIED. 8.3 THE LD. CIT(A) PARTLY ALLOWED THE ADDITION BY F OLLOWING OBSERVATION. 4.42 I HAVE GONE THROUGH AOS FINDING AND ASSESSEE'S SUBMISSION. I HAVE ALSO GONE THROUGH THE LEDGER ACCOUNT RELATED TO THE EXPENDITURE. IT WAS N OTED THAT IN MANY CASES, THE EXPENDITURE WAS NOT SUPPORT ED BY ANY EXTERNAL DOCUMENT. THERE WERE VARIOUS ITEMS OF EXPENDITURE WHICH WERE PERSONAL IN NATURE FOR EXAMP LE GIFTS ON MARRIAGE. CONSIDERING THE FACTS OF THE CASE A DISALLOWANCE O F 20% OUT OF THESE EXPENDITURE IS CONSIDERED REASONAB LE AND CONFIRMED. THE ASSESSEE ALSO CONTENDED THAT ASSESSEE HAS ALREADY PAID FBT ON THESE AMOUNT AND SO NO DISALLOWANCE SHOULD BE MADE UNDER THIS HEAD. AS PER BOARD CIRCULAR NO. 8/2005 DATED 29-08-2005, ISSUED IN ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 10 THE FORM OF QUESTION ANSWER, ANY EXPENDITURE INCURR ED FOR PERSONAL PURPOSE IS NOT ALLOWABLE AS DEDUCTION. HOWEVER, SUCH DEDUCTION WOULD NOT BE LIABLE FOR FBT . ACCORDINGLY, IN THIS CASE FBT ON ASSESSEE WOULD BE LEVIABLE ONLY ON THE BALANCE AMOUNT OUT OF TOTAL EX PENSES UNDER THESE HEADS AS PART OF IT HAS ALREADY BEEN DISALLOWED. IT WILL BE IN THE INTEREST OF JUSTICE T HAT CONSEQUENTIAL RELIEF IS GIVEN BY THE AO IN THE ASSE SSMENT OF ASSESSEE IN RESPECT OF FBT. THE AO IS DIRECTED TO GIVE CONSEQUENT BENEFIT ACCORDINGLY. 8.4 AGGRIEVED BOTH THE PARTIES ARE BEFORE US. 8.5 THE LD. DR RELIED ON THE ORDER OF THE AO. 8.6 LD COUNSEL FOR THE ASSESSE APROPOS REVENUE GROU NDS NO I AND II RELIED ON THE ORDER OF LD. CIT(A). APROPOS GROUND OF ASSES SES APPEAL AND REVENUE GROUND NO III REITERATED THE FACTS AND PLEADS THAT SIMILAR ISSUE AROSE IN ASSESSEES CASE IN AY 2009-10, WHICH CAME TO BE ADJ UDICATED EARLY BY ITAT DUE TO HIGH DEMAND APPEAL. THE ITAT, JAIPUR BENCH (IN ITA NO. 361/JP/2012 OF ASSESSEE AND ITA NO. 419/JP/2012 OF REVENUE ) BY ITS ORDER DATED. 11-03-2014 HELD IN THIS BEHALF AS UNDER:- 6.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD WE HAVE FOUND THAT THE AO HAS MADE THE DISALLOWANCE BY MAKING OBSERVAT ION THAT ASSESSEE HAS FAILED TO PRODUCE SUPPORTING EVIDENCE OR EXPENDITURE ARE EITHER PERSONAL IN NATURE OR NOT FOR BUSINESS PURPO SE OR COMPLETE DETAILS WERE NOT FILED. ON THE OTHER HAND, LD. AR C ONTENDED THAT AO HAS MADE THE DISALLOWANCE ON ADHOC BASIS WITHOUT SP ECIFYING THAT DETAILS OF WHICH EXPENDITURE REQUIRED BY THE AO IS NOT GIVEN. IT IS STATED THAT ALL EXPENSES ARE DULY SUPPORTED BY EVID ENCE AND THEREFORE SUCH ADHOC DISALLOWANCE IS UNJUSTIFIED. IT IS ALSO PLEADED THAT ONCE ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 11 FBT IS PAID ON THE EXPENDITURE CLAIMED, THE SAME CA NNOT BE DISALLOWED IN THE TAX COMPUTATION FOR WHICH DECISIO N OF THE CO- ORDINATE BENCH IS RELIED UPON. WE AGREE WITH THE AR GUMENTS OF THE LD. AR THAT NO ADHOC DISALLOWANCE CAN BE MADE. WE NOTE THAT ASSESSEE HAS FILED THE COMPLETE DETAILS OF EXPENDITURE AS RE QUIRED BY THE AO. THE AO HAS NOT SPECIFIED ANY PARTICULAR EXPENDITURE WHICH IS FOR PERSONAL USE OR FOR NON BUSINESS PURPOSE. IT IS A C ASE OF A CORPORATE ENTITY WHERE THE CONTRIBUTION MADE TO GRAM PANCHAYA T FOR VARIOUS WELFARE MEASURES AT A PLACE WHERE THE FACTORY OF AS SESSEE IS LOCATED AS A PART OF ITS SOCIAL OBLIGATION IS AN ALLOWABLE BUSINESS EXPENDITURE AS HELD IN VARIOUS CASES REFERRED IN GROUND NO. 3 A BOVE. FURTHER, WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT ONCE FBT IS PAID, THE EXPENDITURE CANNOT BE SUBJECT MATTER OF DISALLOWANC E AS HELD BY THIS BENCH IN CASE OF M/S NATURAL SLATE & SANDSTONE EXPO RTS (P) LTD. IN ITA NO 1090/JP/10 DATED 04.02.2011. THE FINDING OF LD CIT(A) THAT TO THE EXTENT THE EXPENDITURE IS DISALLOWED, FBT SHOUL D NOT BE CHARGED IS THEREFORE NOT CORRECT. WE, THEREFORE, DELETE THE VA RIOUS ADHOC DISALLOWANCES MADE BY THE AO AND CONFIRMED BY THE L D. CIT(A). THUS, GROUND NO.4 AND 5 OF THE ASSESSEES APPEAL ARE ALL OWED AND THE SOLITARY GROUND RAISED BY THE REVENUE IN ITS APPE AL IS DISMISSED. IT IS FURTHER PLEADED THAT ASSESSE HAS PAID FBT ON AN AMOUNT HIGHER THAN THIS. IN VIEW THEREOF, NEITHER THE AOS ACTION OF 50% AD HOC DISALLOWANCE NOR CIT(A)S DIRECTION TO REDUCE THE DISALLOWANCE TO TH E EXTENT OF 20% AND ALLOW CORRESPONDING REDUCTION FROM FBT TAX ARE SUST AINABLE. THUS THE ENTIRE DISALLOWANCE SHOULD BE DELETED IN VIEW OF IT AT JUDGMENT CONSEQUENTLY THE DIRECTION TO GIVE REDUCTION IN FBT WILL BECOME NON EST. 8.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. APROPOS REVENUE GROUND NO (I), WE SEE NO INFIRMITY IN THE ORDER OF LD CIT(A) IN ALLOWING THE 43B CLAIM TO THE ASSESSE SINCE IT HAS NOT BEEN DISPUTED THAT AMOUNT IN QUESTION WAS P AID BEFORE DUE DATE OF ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 12 FILING RETURN OF INCOME AND NECESSARY EVIDENCE IS B ROUGHT ON THE RECORD. HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 9.1 APROPOS REVENUE GROUND NO (II) ALSO WE SEE NO I NFIRMITY IN THE ORDER OF LD. CIT(A) IN RESPECT OF EXPENDITURE OF RS. 4,75 ,121/- AS IT HAS NOT BEEN DISPUTED THAT SAME PERTAINED TO AY 2008-09 AND WAS BOOKED IN SUBSEQUENT YEAR BEFORE FILING OF THE AUDIT REPORT. IT IS TRITE LAW THAT ASSESSE CAN CLAIM SUCH EXPENDITURE RELATING TO A YEAR WHICH IS THOUGH ACCOUNTED FOR IN SUBSEQUENT YEAR BUT BEFORE FILING OF THE AUDIT REPO RT. IN ANY CASE IT WILL AMOUNT TO POSTPONEMENT OF LIABILITY AND IN SUCH EVE NTUALITY HONBLE SUPREME COURT JUDGMENT IN THE CASE OF EXCEL INDUSTR IES IS ALSO APPLICABLE. THEREFORE, THIS GROUND OF THE REVENUE IS DISMISSED. 10.1 APROPOS REVENUE GROUND NO (III). AND ASSESSEE S APPEAL RESPECTFULLY FOLLOWING THE ITAT ORDER IN ASSESSES OWN CASE FOR A Y 2009-10 WE HOLD THAT AD HOC DISALLOWANCE IN RESPECT OF THESE ITEMS OF E XPENDITURE CANNOT BE MADE. ASSESSEES BOOKS ARE NOT REJECTED AND THE SAME ARE DULY AUDITED. WE FIND NO FORCE IN AOS VAGUE AND SWEEPING OBSERVATION S THAT EXPENDITURE IS UNVERIFIABLE. THE EXPENDITURE BEING WHOLLY AND EXCL USIVELY FOR ASSESSEES BUSINESS IS ALLOWABLE. IN VIEW THEREOF, THERE IS NO JUSTIFICATION IN RETAINING THE AD HOC 20% BY LD. CIT(A). CONSEQUENTLY THE CIT( A)S DIRECTION ABOUT FBT BECOMES INFRUCTUOUS. REVENUE GROUND IN THIS BEH ALF IS DISMISSED AND ASSESSEES GROUNDS ARE ALLOWED. ITA NO. 81/JP/2012 MANGLAM CEMENT LTD. VS. ADDL. CIT, RANGE-1, KO TA 13 11.0 IN THE RESULT, THE REVENUES APPEAL IS DISMIS SED AND ASSESEES APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 -09-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 30 TH SEPT 2014 *MISHRA COPY FORWARDED TO:- 1. M/S. MANGLAM CEMENT LTD. , KOTA 2. THE ADDL. CIT, RANGE-1, KOTA / THE ACIT, CIRCLE - 1, KOTA 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR 5.THE LD. DR 6.THE GUARD FILE (ITA NO. 81/JP/2012) BY ORDER AR ITAT, JAIPUR